Correlation Between SPARTAN STORES and Monster Beverage
Can any of the company-specific risk be diversified away by investing in both SPARTAN STORES 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 SPARTAN STORES and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SPARTAN STORES and Monster Beverage Corp, you can compare the effects of market volatilities on SPARTAN STORES 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 SPARTAN STORES with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of SPARTAN STORES and Monster Beverage.
Diversification Opportunities for SPARTAN STORES and Monster Beverage
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between SPARTAN and Monster is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding SPARTAN STORES 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 SPARTAN STORES 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 SPARTAN STORES 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 SPARTAN STORES i.e., SPARTAN STORES and Monster Beverage go up and down completely randomly.
Pair Corralation between SPARTAN STORES and Monster Beverage
Assuming the 90 days trading horizon SPARTAN STORES is expected to generate 0.87 times more return on investment than Monster Beverage. However, SPARTAN STORES is 1.15 times less risky than Monster Beverage. It trades about 0.18 of its potential returns per unit of risk. Monster Beverage Corp is currently generating about -0.07 per unit of risk. If you would invest 1,739 in SPARTAN STORES on September 12, 2024 and sell it today you would earn a total of 111.00 from holding SPARTAN STORES or generate 6.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
SPARTAN STORES vs. Monster Beverage Corp
Performance |
| Timeline |
| SPARTAN STORES |
| Monster Beverage Corp |
SPARTAN STORES and Monster Beverage Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SPARTAN STORES and Monster Beverage
The main advantage of trading using opposite SPARTAN STORES and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SPARTAN STORES 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.| SPARTAN STORES vs. Wyndham Hotels Resorts | SPARTAN STORES vs. Luckin Coffee | SPARTAN STORES vs. InterContinental Hotels Group | SPARTAN STORES vs. Liberty Broadband |
| Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc | Monster Beverage vs. Apple Inc |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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