Correlation Between Monster Beverage and Celsius Holdings

Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Celsius Holdings 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 Celsius Holdings 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 Celsius Holdings, you can compare the effects of market volatilities on Monster Beverage and Celsius Holdings 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 Celsius Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Celsius Holdings.

Diversification Opportunities for Monster Beverage and Celsius Holdings

-0.66

Correlation Coefficient

Monster Beverage  Celsius Holdings

Excellent diversification

The 3 months correlation between Monster and Celsius is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Celsius Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Celsius Holdings 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 Celsius Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Celsius Holdings has no effect on the direction of Monster Beverage i.e., Monster Beverage and Celsius Holdings go up and down completely randomly.

Pair Corralation between Monster Beverage and Celsius Holdings

Given the investment horizon of 90 days Monster Beverage Corp is expected to generate 0.41 times more return on investment than Celsius Holdings. However, Monster Beverage Corp is 2.45 times less risky than Celsius Holdings. It trades about 0.16 of its potential returns per unit of risk. Celsius Holdings is currently generating about -0.1 per unit of risk. If you would invest  4,713  in Monster Beverage Corp on August 30, 2024 and sell it today you would earn a total of  801.00  from holding Monster Beverage Corp or generate 17.0% 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.  Celsius Holdings

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 inconsistent basic indicators, Monster Beverage unveiled solid returns over the last few months and may actually be approaching a breakup point.

Celsius Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Celsius Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. Despite unsteady performance in the last few months, the Stock's essential indicators remain fairly strong which may send shares a bit higher in December 2024. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Monster Beverage and Celsius Holdings

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

The idea behind Monster Beverage Corp and Celsius Holdings 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.