Correlation Between Monster Beverage and Emerson Electric
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Emerson Electric 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 Emerson Electric 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 Emerson Electric Co, you can compare the effects of market volatilities on Monster Beverage and Emerson Electric 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 Emerson Electric. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Emerson Electric.
Diversification Opportunities for Monster Beverage and Emerson Electric
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Monster and Emerson is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Emerson Electric Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerson Electric 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 Emerson Electric. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerson Electric has no effect on the direction of Monster Beverage i.e., Monster Beverage and Emerson Electric go up and down completely randomly.
Pair Corralation between Monster Beverage and Emerson Electric
Assuming the 90 days trading horizon Monster Beverage Corp is expected to under-perform the Emerson Electric. But the stock apears to be less risky and, when comparing its historical volatility, Monster Beverage Corp is 4.08 times less risky than Emerson Electric. The stock trades about -0.31 of its potential returns per unit of risk. The Emerson Electric Co is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 204,200 in Emerson Electric Co on November 8, 2024 and sell it today you would earn a total of 60,451 from holding Emerson Electric Co or generate 29.6% 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. Emerson Electric Co
Performance |
| Timeline |
| Monster Beverage Corp |
| Emerson Electric |
Monster Beverage and Emerson Electric Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Emerson Electric
The main advantage of trading using opposite Monster Beverage and Emerson Electric positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Emerson Electric 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 Emerson Electric will offset losses from the drop in Emerson Electric's long position.| Monster Beverage vs. Steel Dynamics | Monster Beverage vs. Verizon Communications | Monster Beverage vs. Taiwan Semiconductor Manufacturing | Monster Beverage vs. DXC Technology |
| Emerson Electric vs. Grupo Industrial Saltillo | Emerson Electric vs. Steel Dynamics | Emerson Electric vs. Micron Technology | Emerson Electric vs. Cognizant Technology Solutions |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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