Correlation Between Monster Beverage and Target

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

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

Diversification Opportunities for Monster Beverage and Target

-0.58

Correlation Coefficient

Monster Beverage  Target

Excellent diversification

The 3 months correlation between Monster and Target is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage and Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Target 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 Target. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Target has no effect on the direction of Monster Beverage i.e., Monster Beverage and Target go up and down completely randomly.

Pair Corralation between Monster Beverage and Target

Assuming the 90 days trading horizon Monster Beverage is expected to under-perform the Target. But the stock apears to be less risky and, when comparing its historical volatility, Monster Beverage is 1.73 times less risky than Target. The stock trades about -0.01 of its potential returns per unit of risk. The Target is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  53,841  in Target on April 24, 2025 and sell it today you would earn a total of  5,559  from holding Target or generate 10.32% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	98.41%
Values	Daily Returns

Monster Beverage  vs.  Target

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.

Target

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Target are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat weak basic indicators, Target may actually be approaching a critical reversion point that can send shares even higher in August 2025.

Pair Trading with Monster Beverage and Target

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

The idea behind Monster Beverage and Target 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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.