Correlation Between Synchrony Financial and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Synchrony Financial 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 Synchrony Financial and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Synchrony Financial and Monster Beverage Corp, you can compare the effects of market volatilities on Synchrony Financial 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 Synchrony Financial with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Synchrony Financial and Monster Beverage.
Diversification Opportunities for Synchrony Financial and Monster Beverage
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Synchrony and Monster is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Synchrony Financial 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 Synchrony Financial 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 Synchrony Financial 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 Synchrony Financial i.e., Synchrony Financial and Monster Beverage go up and down completely randomly.
Pair Corralation between Synchrony Financial and Monster Beverage
Assuming the 90 days trading horizon Synchrony Financial is expected to generate 2.44 times more return on investment than Monster Beverage. However, Synchrony Financial is 2.44 times more volatile than Monster Beverage Corp. It trades about 0.23 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.12 per unit of risk. If you would invest 5,528 in Synchrony Financial on September 1, 2024 and sell it today you would earn a total of 1,224 from holding Synchrony Financial or generate 22.14% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Synchrony Financial vs. Monster Beverage Corp
Performance |
| Timeline |
| Synchrony Financial |
| Monster Beverage Corp |
Synchrony Financial and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Synchrony Financial and Monster Beverage
The main advantage of trading using opposite Synchrony Financial and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Synchrony Financial 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.| Synchrony Financial vs. Uniper SE | Synchrony Financial vs. Mulberry Group PLC | Synchrony Financial vs. London Security Plc | Synchrony Financial vs. Triad Group PLC |
| 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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