Correlation Between Monster Beverage and State Street
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and State Street 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 State Street 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 State Street Corp, you can compare the effects of market volatilities on Monster Beverage and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and State Street.
Diversification Opportunities for Monster Beverage and State Street
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and State is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and State Street Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Corp 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Corp has no effect on the direction of Monster Beverage i.e., Monster Beverage and State Street go up and down completely randomly.
Pair Corralation between Monster Beverage and State Street
Assuming the 90 days trading horizon Monster Beverage is expected to generate 3.69 times less return on investment than State Street. In addition to that, Monster Beverage is 1.18 times more volatile than State Street Corp. It trades about 0.04 of its total potential returns per unit of risk. State Street Corp is currently generating about 0.17 per unit of volatility. If you would invest 9,060 in State Street Corp on September 13, 2024 and sell it today you would earn a total of 837.00 from holding State Street Corp or generate 9.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. State Street Corp
Performance |
| Timeline |
| Monster Beverage Corp |
| State Street Corp |
Monster Beverage and State Street Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and State Street
The main advantage of trading using opposite Monster Beverage and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.| Monster Beverage vs. Samsung Electronics Co | Monster Beverage vs. Samsung Electronics Co | Monster Beverage vs. Hyundai Motor | Monster Beverage vs. Reliance Industries Ltd |
| State Street vs. Aeorema Communications Plc | State Street vs. Spirent Communications plc | State Street vs. Infrastrutture Wireless Italiane | State Street vs. MTI Wireless Edge |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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