Correlation Between Monster Beverage and Textron

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

Diversification Opportunities for Monster Beverage and Textron

0.0

Correlation Coefficient

Monster Beverage  Textron

Pay attention - limited upside

The 3 months correlation between Monster and Textron is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Textron in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Textron 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 Textron. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Textron has no effect on the direction of Monster Beverage i.e., Monster Beverage and Textron go up and down completely randomly.

Pair Corralation between Monster Beverage and Textron

Assuming the 90 days trading horizon Monster Beverage is expected to generate 3.35 times less return on investment than Textron. But when comparing it to its historical volatility, Monster Beverage Corp is 1.08 times less risky than Textron. It trades about 0.0 of its potential returns per unit of risk. Textron is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest  7,087  in Textron on April 22, 2025 and sell it today you would earn a total of  247.00  from holding Textron or generate 3.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Monster Beverage Corp  vs.  Textron

Monster Beverage Corp

Risk-Adjusted Performance

Very Weak

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

Textron

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Textron are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Textron reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monster Beverage and Textron

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

The idea behind Monster Beverage Corp and Textron 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.