Correlation Between Monster Beverage and ATAI Life

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

Diversification Opportunities for Monster Beverage and ATAI Life

-0.4
  Correlation Coefficient

Very good diversification

The 3 months correlation between Monster and ATAI Life is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and ATAI Life Sciences in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ATAI Life Sciences 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 ATAI Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ATAI Life Sciences has no effect on the direction of Monster Beverage i.e., Monster Beverage and ATAI Life go up and down completely randomly.

Pair Corralation between Monster Beverage and ATAI Life

Given the investment horizon of 90 days Monster Beverage Corp is expected to generate 0.39 times more return on investment than ATAI Life. However, Monster Beverage Corp is 2.54 times less risky than ATAI Life. It trades about 0.13 of its potential returns per unit of risk. ATAI Life Sciences is currently generating about -0.05 per unit of risk. If you would invest  8,900  in Monster Beverage Corp on September 1, 2022 and sell it today you would earn a total of  1,386  from holding Monster Beverage Corp or generate 15.57% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Monster Beverage Corp  vs.  ATAI Life Sciences

 Performance (%) 
       Timeline  
Monster Beverage Corp 
Monster Performance
10 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 10 (%) 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 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 conflicting performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in December 2022. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ATAI Life Price Channel

Monster Beverage and ATAI Life Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Monster Beverage and ATAI Life

The main advantage of trading using opposite Monster Beverage and ATAI Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, ATAI Life 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 ATAI Life will offset losses from the drop in ATAI Life's long position.
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The idea behind Monster Beverage Corp and ATAI Life Sciences 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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.

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