Correlation Between American Express and Monster Beverage

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

Diversification Opportunities for American Express and Monster Beverage

  Correlation Coefficient

Very good diversification

The 3 months correlation between American and Monster is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding American Express and Monster Beverage Cp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage and American Express 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 American Express 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 has no effect on the direction of American Express i.e., American Express and Monster Beverage go up and down completely randomly.

Pair Corralation between American Express and Monster Beverage

Considering the 90-day investment horizon American Express is expected to generate 1.4 times more return on investment than Monster Beverage. However, American Express is 1.4 times more volatile than Monster Beverage Cp. It trades about 0.04 of its potential returns per unit of risk. Monster Beverage Cp is currently generating about 0.02 per unit of risk. If you would invest  10,134  in American Express on June 27, 2022 and sell it today you would earn a total of  3,892  from holding American Express or generate 38.41% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
ValuesDaily Returns

American Express  vs.  Monster Beverage Cp

 Performance (%) 
American Express 
American Performance
0 of 100
Over the last 90 days American Express has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, American Express is not utilizing all of its potentials. The new stock price disarray, may contribute to short-term losses for the insiders.

American Price Channel

Monster Beverage 
Monster Performance
0 of 100
Over the last 90 days Monster Beverage Cp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Monster Price Channel

American Express and Monster Beverage Volatility Contrast

   Predicted Return Density   

Pair Trading with American Express and Monster Beverage

The main advantage of trading using opposite American Express and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Express 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 American Express and Monster Beverage Cp 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 Price Transformation module to use Price Transformation models to analyze depth of different equity instruments across global markets.

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