Correlation Between Monster Beverage and Fastenal

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

Diversification Opportunities for Monster Beverage and Fastenal

-0.35

Correlation Coefficient

Monster Beverage  Fastenal

Very good diversification

The 3 months correlation between Monster and Fastenal is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Fastenal Company in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fastenal 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 Fastenal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fastenal has no effect on the direction of Monster Beverage i.e., Monster Beverage and Fastenal go up and down completely randomly.

Pair Corralation between Monster Beverage and Fastenal

Assuming the 90 days trading horizon Monster Beverage Corp is expected to under-perform the Fastenal. In addition to that, Monster Beverage is 1.4 times more volatile than Fastenal Company. It trades about 0.0 of its total potential returns per unit of risk. Fastenal Company is currently generating about 0.17 per unit of volatility. If you would invest  3,670  in Fastenal Company on May 19, 2025 and sell it today you would earn a total of  525.00  from holding Fastenal Company or generate 14.31% return on investment over 90 days.

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

Monster Beverage Corp  vs.  Fastenal Company

Monster Beverage Corp

Risk-Adjusted Performance

Weakest

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.

Fastenal

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Fastenal Company are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, Fastenal reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monster Beverage and Fastenal

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

The idea behind Monster Beverage Corp and Fastenal Company 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.