Correlation Between Monster Beverage and Barfresh Food

Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Barfresh Food 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 Monster Beverage and Barfresh Food into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Monster Beverage Corp and Barfresh Food Group, you can compare the effects of market volatilities on Monster Beverage and Barfresh Food 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 Monster Beverage with a short position of Barfresh Food. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Barfresh Food.

Diversification Opportunities for Monster Beverage and Barfresh Food

-0.65

Correlation Coefficient

Monster Beverage  Barfresh Food

Excellent diversification

The 3 months correlation between Monster and Barfresh is -0.65. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Barfresh Food Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Barfresh Food Group and Monster Beverage 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 Monster Beverage Corp are associated (or correlated) with Barfresh Food. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Barfresh Food Group has no effect on the direction of Monster Beverage i.e., Monster Beverage and Barfresh Food go up and down completely randomly.

Pair Corralation between Monster Beverage and Barfresh Food

Given the investment horizon of 90 days Monster Beverage is expected to generate 11.27 times less return on investment than Barfresh Food. But when comparing it to its historical volatility, Monster Beverage Corp is 4.23 times less risky than Barfresh Food. It trades about 0.04 of its potential returns per unit of risk. Barfresh Food Group is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  163.00  in Barfresh Food Group on August 30, 2024 and sell it today you would earn a total of  131.00  from holding Barfresh Food Group or generate 80.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Monster Beverage Corp  vs.  Barfresh Food Group

Monster Beverage Corp

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Monster Beverage unveiled solid returns over the last few months and may actually be approaching a breakup point.

Barfresh Food Group

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Barfresh Food Group has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's technical and fundamental indicators remain strong and the recent confusion on Wall Street may also be a sign of long-lasting gains for the firm traders.

Pair Trading with Monster Beverage and Barfresh Food

The main advantage of trading using opposite Monster Beverage and Barfresh Food positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Barfresh Food 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 Barfresh Food will offset losses from the drop in Barfresh Food's long position.

The idea behind Monster Beverage Corp and Barfresh Food Group 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.