Correlation Between Liberty Media and Monks Investment
Can any of the company-specific risk be diversified away by investing in both Liberty Media and Monks Investment 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 Liberty Media and Monks Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Liberty Media Corp and Monks Investment Trust, you can compare the effects of market volatilities on Liberty Media and Monks Investment 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 Liberty Media with a short position of Monks Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Liberty Media and Monks Investment.
Diversification Opportunities for Liberty Media and Monks Investment
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Liberty and Monks is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Liberty Media Corp and Monks Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monks Investment Trust and Liberty Media 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 Liberty Media Corp are associated (or correlated) with Monks Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monks Investment Trust has no effect on the direction of Liberty Media i.e., Liberty Media and Monks Investment go up and down completely randomly.
Pair Corralation between Liberty Media and Monks Investment
Assuming the 90 days trading horizon Liberty Media Corp is expected to generate 2.08 times more return on investment than Monks Investment. However, Liberty Media is 2.08 times more volatile than Monks Investment Trust. It trades about 0.21 of its potential returns per unit of risk. Monks Investment Trust is currently generating about 0.31 per unit of risk. If you would invest 7,482 in Liberty Media Corp on September 1, 2024 and sell it today you would earn a total of 664.00 from holding Liberty Media Corp or generate 8.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Liberty Media Corp vs. Monks Investment Trust
Performance |
| Timeline |
| Liberty Media Corp |
| Monks Investment Trust |
Liberty Media and Monks Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Liberty Media and Monks Investment
The main advantage of trading using opposite Liberty Media and Monks Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Liberty Media position performs unexpectedly, Monks Investment 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 Monks Investment will offset losses from the drop in Monks Investment's long position.| Liberty Media vs. Applied Materials | Liberty Media vs. XLMedia PLC | Liberty Media vs. Grand Vision Media | Liberty Media vs. Hollywood Bowl Group |
| Monks Investment vs. Universal Display Corp | Monks Investment vs. Livermore Investments Group | Monks Investment vs. Bankers Investment Trust | Monks Investment vs. Kinnevik Investment AB |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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