Correlation Between Safety Shot and Monster Beverage

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

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

Diversification Opportunities for Safety Shot and Monster Beverage

-0.6

Correlation Coefficient

Safety Shot  Monster Beverage

Excellent diversification

The 3 months correlation between Safety and Monster is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Safety Shot 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 Safety Shot 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 Safety Shot 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 Safety Shot i.e., Safety Shot and Monster Beverage go up and down completely randomly.

Pair Corralation between Safety Shot and Monster Beverage

Given the investment horizon of 90 days Safety Shot is expected to under-perform the Monster Beverage. In addition to that, Safety Shot is 3.21 times more volatile than Monster Beverage Corp. It trades about -0.19 of its total potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.02 per unit of volatility. If you would invest  5,183  in Monster Beverage Corp on September 19, 2024 and sell it today you would earn a total of  39.00  from holding Monster Beverage Corp or generate 0.75% return on investment over 90 days.

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

Safety Shot  vs.  Monster Beverage Corp

Safety Shot

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Safety Shot has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Monster Beverage Corp

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 1 (%) 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 recent stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Safety Shot and Monster Beverage

The main advantage of trading using opposite Safety Shot and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Safety Shot 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 Safety Shot 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.