Correlation Between Monster Beverage and Sumitomo Mitsui
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Sumitomo Mitsui 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 Sumitomo Mitsui into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monster Beverage and Sumitomo Mitsui Financial, you can compare the effects of market volatilities on Monster Beverage and Sumitomo Mitsui 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 Sumitomo Mitsui. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Sumitomo Mitsui.
Diversification Opportunities for Monster Beverage and Sumitomo Mitsui
0.66 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monster and Sumitomo is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage and Sumitomo Mitsui Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sumitomo Mitsui Financial 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 are associated (or correlated) with Sumitomo Mitsui. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sumitomo Mitsui Financial has no effect on the direction of Monster Beverage i.e., Monster Beverage and Sumitomo Mitsui go up and down completely randomly.
Pair Corralation between Monster Beverage and Sumitomo Mitsui
Assuming the 90 days trading horizon Monster Beverage is expected to generate 5.69 times less return on investment than Sumitomo Mitsui. But when comparing it to its historical volatility, Monster Beverage is 1.59 times less risky than Sumitomo Mitsui. It trades about 0.03 of its potential returns per unit of risk. Sumitomo Mitsui Financial is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 4,162 in Sumitomo Mitsui Financial on August 31, 2024 and sell it today you would earn a total of 4,250 from holding Sumitomo Mitsui Financial or generate 102.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 68.35% |
| Values | Daily Returns |
Monster Beverage vs. Sumitomo Mitsui Financial
Performance |
| Timeline |
| Monster Beverage |
| Sumitomo Mitsui Financial |
Monster Beverage and Sumitomo Mitsui Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Sumitomo Mitsui
The main advantage of trading using opposite Monster Beverage and Sumitomo Mitsui positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Sumitomo Mitsui 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 Sumitomo Mitsui will offset losses from the drop in Sumitomo Mitsui's long position.| Monster Beverage vs. Fras le SA | Monster Beverage vs. Energisa SA | Monster Beverage vs. Clave Indices De | Monster Beverage vs. BTG Pactual Logstica |
| Sumitomo Mitsui vs. Mitsubishi UFJ Financial | Sumitomo Mitsui vs. Fras le SA | Sumitomo Mitsui vs. Western Digital | Sumitomo Mitsui vs. Energisa SA |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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