Correlation Between Monster Beverage and Coca Cola

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

Diversification Opportunities for Monster Beverage and Coca Cola

-0.07
  Correlation Coefficient

Good diversification

The 3 months correlation between Monster and Coca Cola is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Cp and Coca-Cola in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coca-Cola 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 Cp are associated (or correlated) with Coca Cola. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coca-Cola has no effect on the direction of Monster Beverage i.e., Monster Beverage and Coca Cola go up and down completely randomly.

Pair Corralation between Monster Beverage and Coca Cola

Given the investment horizon of 90 days Monster Beverage is expected to generate 1.25 times less return on investment than Coca Cola. In addition to that, Monster Beverage is 1.38 times more volatile than Coca-Cola. It trades about 0.04 of its total potential returns per unit of risk. Coca-Cola is currently generating about 0.08 per unit of volatility. If you would invest  4,254  in Coca-Cola on April 3, 2022 and sell it today you would earn a total of  2,184  from holding Coca-Cola or generate 51.34% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Monster Beverage Cp  vs.  Coca-Cola

 Performance (%) 
      Timeline 
Monster Beverage 
Monster Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Cp are ranked lower than 9 (%) 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.

Structure and Payout Changes

Last Split Factor
3:1
Last Split Date
2016-11-10

Monster Price Channel

Coca-Cola 
Coca Cola Performance
3 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Coca-Cola are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Coca Cola is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Structure and Payout Changes

Forward Annual Dividend Yield
0.028
Payout Ratio
0.71
Last Split Factor
2:1
Forward Annual Dividend Rate
1.76
Dividend Date
2022-07-01
Ex Dividend Date
2022-06-14
Last Split Date
2012-08-13

Coca Cola Price Channel

Monster Beverage and Coca Cola Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Monster Beverage and Coca Cola

The main advantage of trading using opposite Monster Beverage and Coca Cola positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Coca Cola 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 Coca Cola will offset losses from the drop in Coca Cola's long position.
The idea behind Monster Beverage Cp and Coca-Cola 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.
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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