Correlation Between CATLIN GROUP and Monks Investment
Can any of the company-specific risk be diversified away by investing in both CATLIN GROUP 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 CATLIN GROUP and Monks Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CATLIN GROUP and Monks Investment Trust, you can compare the effects of market volatilities on CATLIN GROUP 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 CATLIN GROUP with a short position of Monks Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of CATLIN GROUP and Monks Investment.
Diversification Opportunities for CATLIN GROUP and Monks Investment
-0.86 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between CATLIN and Monks is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP 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 CATLIN GROUP 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 CATLIN GROUP 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 CATLIN GROUP i.e., CATLIN GROUP and Monks Investment go up and down completely randomly.
Pair Corralation between CATLIN GROUP and Monks Investment
Assuming the 90 days trading horizon CATLIN GROUP is expected to generate 1.85 times more return on investment than Monks Investment. However, CATLIN GROUP is 1.85 times more volatile than Monks Investment Trust. It trades about 0.06 of its potential returns per unit of risk. Monks Investment Trust is currently generating about 0.09 per unit of risk. If you would invest 7,500 in CATLIN GROUP on September 14, 2024 and sell it today you would earn a total of 1,900 from holding CATLIN GROUP or generate 25.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
CATLIN GROUP vs. Monks Investment Trust
Performance |
| Timeline |
| CATLIN GROUP |
| Monks Investment Trust |
CATLIN GROUP and Monks Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CATLIN GROUP and Monks Investment
The main advantage of trading using opposite CATLIN GROUP and Monks Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP 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.| CATLIN GROUP vs. Alfa Financial Software | CATLIN GROUP vs. L3Harris Technologies | CATLIN GROUP vs. Cairo Communication SpA | CATLIN GROUP vs. Zoom Video Communications |
| Monks Investment vs. Fevertree Drinks Plc | Monks Investment vs. AfriTin Mining | Monks Investment vs. GoldMining | Monks Investment vs. Griffin Mining |
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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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