Correlation Between Monster Beverage and MAHLE Metal

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

By analyzing existing cross correlation between Monster Beverage and MAHLE Metal Leve, you can compare the effects of market volatilities on Monster Beverage and MAHLE Metal 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 MAHLE Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and MAHLE Metal.

Diversification Opportunities for Monster Beverage and MAHLE Metal

0.59

Correlation Coefficient

Monster Beverage  MAHLE Metal

Very weak diversification

The 3 months correlation between Monster and MAHLE is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage and MAHLE Metal Leve in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MAHLE Metal Leve 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 are associated (or correlated) with MAHLE Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MAHLE Metal Leve has no effect on the direction of Monster Beverage i.e., Monster Beverage and MAHLE Metal go up and down completely randomly.

Pair Corralation between Monster Beverage and MAHLE Metal

Assuming the 90 days trading horizon Monster Beverage is expected to generate 0.83 times more return on investment than MAHLE Metal. However, Monster Beverage is 1.2 times less risky than MAHLE Metal. It trades about -0.01 of its potential returns per unit of risk. MAHLE Metal Leve is currently generating about -0.02 per unit of risk. If you would invest  4,187  in Monster Beverage on April 24, 2025 and sell it today you would lose (43.00) from holding Monster Beverage or give up 1.03% of portfolio value over 90 days.

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

Monster Beverage  vs.  MAHLE Metal Leve

Monster Beverage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monster Beverage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Monster Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

MAHLE Metal Leve

Risk-Adjusted Performance

Very Weak

Over the last 90 days MAHLE Metal Leve has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, MAHLE Metal is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Monster Beverage and MAHLE Metal

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

The idea behind Monster Beverage and MAHLE Metal Leve 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.