Correlation Between Monster Beverage and Sun Life
Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Sun Life 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 Sun Life 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 Sun Life Financial, you can compare the effects of market volatilities on Monster Beverage and Sun Life 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 Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Sun Life.
Diversification Opportunities for Monster Beverage and Sun Life
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Monster and Sun is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life 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 Corp are associated (or correlated) with Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of Monster Beverage i.e., Monster Beverage and Sun Life go up and down completely randomly.
Pair Corralation between Monster Beverage and Sun Life
Assuming the 90 days trading horizon Monster Beverage is expected to generate 1.75 times less return on investment than Sun Life. In addition to that, Monster Beverage is 1.22 times more volatile than Sun Life Financial. It trades about 0.14 of its total potential returns per unit of risk. Sun Life Financial is currently generating about 0.29 per unit of volatility. If you would invest 5,250 in Sun Life Financial on August 29, 2024 and sell it today you would earn a total of 600.00 from holding Sun Life Financial or generate 11.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monster Beverage Corp vs. Sun Life Financial
Performance |
| Timeline |
| Monster Beverage Corp |
| Sun Life Financial |
Monster Beverage and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monster Beverage and Sun Life
The main advantage of trading using opposite Monster Beverage and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Sun Life 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 Sun Life will offset losses from the drop in Sun Life's long position.| Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Superior Plus Corp | Monster Beverage vs. SIVERS SEMICONDUCTORS AB |
| Sun Life vs. Pure Storage | Sun Life vs. Science Applications International | Sun Life vs. SBA Communications Corp | Sun Life vs. Public Storage |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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