Correlation Between Monster Beverage and AMGEN

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

Diversification Opportunities for Monster Beverage and AMGEN

-0.66

Correlation Coefficient

Monster Beverage  AMGEN

Excellent diversification

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

Pair Corralation between Monster Beverage and AMGEN

Given the investment horizon of 90 days Monster Beverage Corp is expected to generate 1.78 times more return on investment than AMGEN. However, Monster Beverage is 1.78 times more volatile than AMGEN INC. It trades about 0.03 of its potential returns per unit of risk. AMGEN INC is currently generating about -0.26 per unit of risk. If you would invest  5,075  in Monster Beverage Corp on September 14, 2024 and sell it today you would earn a total of  135.00  from holding Monster Beverage Corp or generate 2.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	69.84%
Values	Daily Returns

Monster Beverage Corp  vs.  AMGEN INC

Monster Beverage Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 2 (%) 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.

AMGEN INC

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AMGEN INC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Bond's basic indicators remain somewhat strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for AMGEN INC investors.

Pair Trading with Monster Beverage and AMGEN

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

The idea behind Monster Beverage Corp and AMGEN INC 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.