Correlation Between Monster Beverage and Sonos

Can any of the company-specific risk be diversified away by investing in both Monster Beverage and Sonos 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 Sonos 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 Sonos Inc, you can compare the effects of market volatilities on Monster Beverage and Sonos 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 Sonos. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monster Beverage and Sonos.

Diversification Opportunities for Monster Beverage and Sonos

-0.46

Correlation Coefficient

Monster Beverage  Sonos

Very good diversification

The 3 months correlation between Monster and Sonos is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Monster Beverage Corp and Sonos Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sonos Inc 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 Sonos. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sonos Inc has no effect on the direction of Monster Beverage i.e., Monster Beverage and Sonos go up and down completely randomly.

Pair Corralation between Monster Beverage and Sonos

Given the investment horizon of 90 days Monster Beverage Corp is expected to generate 0.59 times more return on investment than Sonos. However, Monster Beverage Corp is 1.7 times less risky than Sonos. It trades about 0.11 of its potential returns per unit of risk. Sonos Inc is currently generating about -0.14 per unit of risk. If you would invest  5,172  in Monster Beverage Corp on December 20, 2024 and sell it today you would earn a total of  510.00  from holding Monster Beverage Corp or generate 9.86% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Monster Beverage Corp  vs.  Sonos Inc

Monster Beverage Corp

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unfluctuating basic indicators, Monster Beverage may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Sonos Inc

Risk-Adjusted Performance

Very Weak

Over the last 90 days Sonos Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of conflicting performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in April 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Pair Trading with Monster Beverage and Sonos

The main advantage of trading using opposite Monster Beverage and Sonos positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monster Beverage position performs unexpectedly, Sonos 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 Sonos will offset losses from the drop in Sonos' long position.

The idea behind Monster Beverage Corp and Sonos Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..