Correlation Between Sun Country and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both Sun Country 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 Sun Country and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sun Country Airlines and Monster Beverage Corp, you can compare the effects of market volatilities on Sun Country 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 Sun Country with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sun Country and Monster Beverage.
Diversification Opportunities for Sun Country and Monster Beverage
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Sun and Monster is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Sun Country Airlines 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 Sun Country 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 Sun Country Airlines 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 Sun Country i.e., Sun Country and Monster Beverage go up and down completely randomly.
Pair Corralation between Sun Country and Monster Beverage
Given the investment horizon of 90 days Sun Country Airlines is expected to generate 1.94 times more return on investment than Monster Beverage. However, Sun Country is 1.94 times more volatile than Monster Beverage Corp. It trades about 0.11 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.09 per unit of risk. If you would invest 1,304 in Sun Country Airlines on August 28, 2024 and sell it today you would earn a total of 101.00 from holding Sun Country Airlines or generate 7.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Sun Country Airlines vs. Monster Beverage Corp
Performance |
| Timeline |
| Sun Country Airlines |
| Monster Beverage Corp |
Sun Country and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sun Country and Monster Beverage
The main advantage of trading using opposite Sun Country and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sun Country 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.| Sun Country vs. Spirit Airlines | Sun Country vs. JetBlue Airways Corp | Sun Country vs. Allegiant Travel | Sun Country vs. Copa Holdings SA |
| Monster Beverage vs. Vita Coco | Monster Beverage vs. PepsiCo | Monster Beverage vs. The Coca Cola | Monster Beverage vs. Coca Cola Femsa SAB |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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