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

-0.58

Correlation Coefficient

SPARTAN STORES  Monster Beverage

Excellent diversification

The 3 months correlation between SPARTAN and Monster is -0.58. 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 under-perform the Monster Beverage. In addition to that, SPARTAN STORES is 1.53 times more volatile than Monster Beverage Corp. It trades about -0.06 of its total potential returns per unit of risk. Monster Beverage Corp is currently generating about 0.08 per unit of volatility. If you would invest  4,682  in Monster Beverage Corp on September 29, 2024 and sell it today you would earn a total of  352.00  from holding Monster Beverage Corp or generate 7.52% return on investment over 90 days.

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

SPARTAN STORES  vs.  Monster Beverage Corp

SPARTAN STORES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days SPARTAN STORES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's forward-looking indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Monster Beverage Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Monster Beverage Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Monster Beverage may actually be approaching a critical reversion point that can send shares even higher in January 2025.

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.

The idea behind SPARTAN STORES and Monster Beverage Corp 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.

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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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.