Correlation Between Eastman Chemical and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Eastman Chemical 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 Eastman Chemical and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Eastman Chemical Co and Monster Beverage Corp, you can compare the effects of market volatilities on Eastman Chemical 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 Eastman Chemical with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Eastman Chemical and Monster Beverage.
Diversification Opportunities for Eastman Chemical and Monster Beverage
0.12 | Correlation Coefficient |
Average diversification
The 3 months correlation between Eastman and Monster is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Eastman Chemical Co 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 Eastman Chemical 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 Eastman Chemical Co 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 Eastman Chemical i.e., Eastman Chemical and Monster Beverage go up and down completely randomly.
Pair Corralation between Eastman Chemical and Monster Beverage
Assuming the 90 days trading horizon Eastman Chemical Co is expected to under-perform the Monster Beverage. But the stock apears to be less risky and, when comparing its historical volatility, Eastman Chemical Co is 1.1 times less risky than Monster Beverage. The stock trades about 0.0 of its potential returns per unit of risk. The Monster Beverage Corp is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 5,303 in Monster Beverage Corp on September 1, 2024 and sell it today you would earn a total of 234.00 from holding Monster Beverage Corp or generate 4.41% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Eastman Chemical Co vs. Monster Beverage Corp
Performance |
| Timeline |
| Eastman Chemical |
| Monster Beverage Corp |
Eastman Chemical and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Eastman Chemical and Monster Beverage
The main advantage of trading using opposite Eastman Chemical and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Eastman Chemical 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.| Eastman Chemical vs. Ameriprise Financial | Eastman Chemical vs. Silvercorp Metals | Eastman Chemical vs. St Galler Kantonalbank | Eastman Chemical vs. Wyndham Hotels Resorts |
| Monster Beverage vs. Uniper SE | Monster Beverage vs. Mulberry Group PLC | Monster Beverage vs. London Security Plc | Monster Beverage vs. Triad Group PLC |
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 the Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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