Correlation Between Aurora Investment and Monks Investment
Can any of the company-specific risk be diversified away by investing in both Aurora Investment 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 Aurora Investment and Monks Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aurora Investment Trust and Monks Investment Trust, you can compare the effects of market volatilities on Aurora Investment 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 Aurora Investment with a short position of Monks Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aurora Investment and Monks Investment.
Diversification Opportunities for Aurora Investment and Monks Investment
-0.88 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Aurora and Monks is -0.88. Overlapping area represents the amount of risk that can be diversified away by holding Aurora Investment Trust 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 Aurora Investment 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 Aurora Investment Trust 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 Aurora Investment i.e., Aurora Investment and Monks Investment go up and down completely randomly.
Pair Corralation between Aurora Investment and Monks Investment
Assuming the 90 days trading horizon Aurora Investment Trust is expected to under-perform the Monks Investment. In addition to that, Aurora Investment is 1.25 times more volatile than Monks Investment Trust. It trades about -0.08 of its total potential returns per unit of risk. Monks Investment Trust is currently generating about 0.09 per unit of volatility. If you would invest 125,200 in Monks Investment Trust on September 13, 2024 and sell it today you would earn a total of 2,000 from holding Monks Investment Trust or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aurora Investment Trust vs. Monks Investment Trust
Performance |
| Timeline |
| Aurora Investment Trust |
| Monks Investment Trust |
Aurora Investment and Monks Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aurora Investment and Monks Investment
The main advantage of trading using opposite Aurora Investment and Monks Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aurora Investment 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.| Aurora Investment vs. Catalyst Media Group | Aurora Investment vs. CATLIN GROUP | Aurora Investment vs. Tamburi Investment Partners | Aurora Investment vs. Magnora ASA |
| Monks Investment vs. Catalyst Media Group | Monks Investment vs. CATLIN GROUP | Monks Investment vs. Tamburi Investment Partners | Monks Investment vs. Magnora ASA |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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