Correlation Between Jones Soda and Monster Beverage

Can any of the company-specific risk be diversified away by investing in both Jones Soda and Monster Beverage at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Jones Soda and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jones Soda Co and Monster Beverage Corp, you can compare the effects of market volatilities on Jones Soda and Monster Beverage and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Jones Soda with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jones Soda and Monster Beverage.

Diversification Opportunities for Jones Soda and Monster Beverage

0.1

Correlation Coefficient

Jones Soda  Monster Beverage

Average diversification

The 3 months correlation between Jones and Monster is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Jones Soda Co and Monster Beverage Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage Corp and Jones Soda is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Jones Soda Co are associated (or correlated) with Monster Beverage. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monster Beverage Corp has no effect on the direction of Jones Soda i.e., Jones Soda and Monster Beverage go up and down completely randomly.

Pair Corralation between Jones Soda and Monster Beverage

If you would invest  20.00  in Jones Soda Co on September 22, 2024 and sell it today you would earn a total of  0.00  from holding Jones Soda Co or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Jones Soda Co  vs.  Monster Beverage Corp

Jones Soda

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jones Soda Co has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong fundamental indicators, Jones Soda is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Monster Beverage Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monster Beverage Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Monster Beverage is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Jones Soda and Monster Beverage

The main advantage of trading using opposite Jones Soda and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jones Soda position performs unexpectedly, Monster Beverage can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Monster Beverage will offset losses from the drop in Monster Beverage's long position.

The idea behind Jones Soda Co and Monster Beverage Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Insider Screener module to find insiders across different sectors to evaluate their impact on performance.