Correlation Between Principal Financial and Monster Beverage

Can any of the company-specific risk be diversified away by investing in both Principal Financial 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 Principal Financial and Monster Beverage into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Principal Financial Group, and Monster Beverage, you can compare the effects of market volatilities on Principal Financial 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 Principal Financial with a short position of Monster Beverage. Check out your portfolio center. Please also check ongoing floating volatility patterns of Principal Financial and Monster Beverage.

Diversification Opportunities for Principal Financial and Monster Beverage

-0.16

Correlation Coefficient

Principal Financial  Monster Beverage

Good diversification

The 3 months correlation between Principal and Monster is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding Principal Financial Group, and Monster Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monster Beverage and Principal Financial 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 Principal Financial Group, 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 has no effect on the direction of Principal Financial i.e., Principal Financial and Monster Beverage go up and down completely randomly.

Pair Corralation between Principal Financial and Monster Beverage

Assuming the 90 days trading horizon Principal Financial Group, is expected to generate 0.09 times more return on investment than Monster Beverage. However, Principal Financial Group, is 11.01 times less risky than Monster Beverage. It trades about 0.13 of its potential returns per unit of risk. Monster Beverage is currently generating about -0.02 per unit of risk. If you would invest  33,429  in Principal Financial Group, on April 20, 2025 and sell it today you would earn a total of  302.00  from holding Principal Financial Group, or generate 0.9% return on investment over 90 days.

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

Principal Financial Group,  vs.  Monster Beverage

Principal Financial

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Principal Financial Group, are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong technical and fundamental indicators, Principal Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Monster Beverage

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monster Beverage has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, Monster Beverage is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Principal Financial and Monster Beverage

The main advantage of trading using opposite Principal Financial and Monster Beverage positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Principal Financial 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 Principal Financial Group, and Monster Beverage 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.