Correlation Between ATAI Life and Monster Beverage

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Can any of the company-specific risk be diversified away by investing in both ATAI Life 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 ATAI Life and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ATAI Life Sciences and Monster Beverage Corp, you can compare the effects of market volatilities on ATAI Life 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 ATAI Life with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of ATAI Life and Monster Beverage.

Diversification Opportunities for ATAI Life and Monster Beverage

-0.34
  Correlation Coefficient

Very good diversification

The 3 months correlation between ATAI Life and Monster is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding ATAI Life Sciences 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 ATAI Life 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 ATAI Life Sciences 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 ATAI Life i.e., ATAI Life and Monster Beverage go up and down completely randomly.

Pair Corralation between ATAI Life and Monster Beverage

Given the investment horizon of 90 days ATAI Life Sciences is expected to generate 2.52 times more return on investment than Monster Beverage. However, ATAI Life is 2.52 times more volatile than Monster Beverage Corp. It trades about 0.18 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.31 per unit of risk. If you would invest  298.00  in ATAI Life Sciences on September 4, 2022 and sell it today you would earn a total of  57.00  from holding ATAI Life Sciences or generate 19.13% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

ATAI Life Sciences  vs.  Monster Beverage Corp

 Performance (%) 
       Timeline  
ATAI Life Sciences 
ATAI Life Performance
0 of 100
Over the last 90 days ATAI Life Sciences has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest unsteady performance, the Stock's basic indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

ATAI Life Price Channel

Monster Beverage Corp 
Monster Performance
11 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively conflicting basic indicators, Monster Beverage unveiled solid returns over the last few months and may actually be approaching a breakup point.

Monster Price Channel

ATAI Life and Monster Beverage Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with ATAI Life and Monster Beverage

The main advantage of trading using opposite ATAI Life and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ATAI Life 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.
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The idea behind ATAI Life Sciences 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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Check out your portfolio center. 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.

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