Correlation Between Monster Beverage and VPC Specialty

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

Diversification Opportunities for Monster Beverage and VPC Specialty

0.15

Correlation Coefficient

Monster Beverage  VPC Specialty

Average diversification

The 3 months correlation between Monster and VPC is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and VPC Specialty Lending in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on VPC Specialty Lending 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 VPC Specialty. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of VPC Specialty Lending has no effect on the direction of Monster Beverage i.e., Monster Beverage and VPC Specialty go up and down completely randomly.

Pair Corralation between Monster Beverage and VPC Specialty

Assuming the 90 days trading horizon Monster Beverage is expected to generate 9.82 times less return on investment than VPC Specialty. But when comparing it to its historical volatility, Monster Beverage Corp is 2.35 times less risky than VPC Specialty. It trades about 0.03 of its potential returns per unit of risk. VPC Specialty Lending is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,231  in VPC Specialty Lending on April 25, 2025 and sell it today you would earn a total of  249.00  from holding VPC Specialty Lending or generate 20.23% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Monster Beverage Corp  vs.  VPC Specialty Lending

Monster Beverage Corp

Risk-Adjusted Performance

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 latest stock price uproar, may contribute to short-horizon losses for the private investors.

VPC Specialty Lending

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in VPC Specialty Lending are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, VPC Specialty exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monster Beverage and VPC Specialty

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

The idea behind Monster Beverage Corp and VPC Specialty Lending 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.