Correlation Between Monster Beverage and Red Branch

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

Diversification Opportunities for Monster Beverage and Red Branch

0.0

Correlation Coefficient

Monster Beverage  Red Branch

Pay attention - limited upside

The 3 months correlation between Monster and Red is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Red Branch Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Red Branch Technologies 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 Red Branch. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Red Branch Technologies has no effect on the direction of Monster Beverage i.e., Monster Beverage and Red Branch go up and down completely randomly.

Pair Corralation between Monster Beverage and Red Branch

Given the investment horizon of 90 days Monster Beverage Corp is expected to generate 0.31 times more return on investment than Red Branch. However, Monster Beverage Corp is 3.23 times less risky than Red Branch. It trades about 0.05 of its potential returns per unit of risk. Red Branch Technologies is currently generating about -0.12 per unit of risk. If you would invest  5,083  in Monster Beverage Corp on September 13, 2024 and sell it today you would earn a total of  209.00  from holding Monster Beverage Corp or generate 4.11% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Monster Beverage Corp  vs.  Red Branch Technologies

Monster Beverage Corp

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Monster Beverage is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Red Branch Technologies

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Red Branch Technologies has generated negative risk-adjusted returns adding no value to investors with long positions. Despite abnormal performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Pair Trading with Monster Beverage and Red Branch

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

The idea behind Monster Beverage Corp and Red Branch Technologies 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.