Correlation Between Cairn Homes and Monks Investment
Can any of the company-specific risk be diversified away by investing in both Cairn Homes 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 Cairn Homes and Monks Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cairn Homes PLC and Monks Investment Trust, you can compare the effects of market volatilities on Cairn Homes 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 Cairn Homes with a short position of Monks Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cairn Homes and Monks Investment.
Diversification Opportunities for Cairn Homes and Monks Investment
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Cairn and Monks is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Cairn Homes PLC 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 Cairn Homes 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 Cairn Homes PLC 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 Cairn Homes i.e., Cairn Homes and Monks Investment go up and down completely randomly.
Pair Corralation between Cairn Homes and Monks Investment
Assuming the 90 days trading horizon Cairn Homes PLC is expected to generate 1.33 times more return on investment than Monks Investment. However, Cairn Homes is 1.33 times more volatile than Monks Investment Trust. It trades about -0.01 of its potential returns per unit of risk. Monks Investment Trust is currently generating about -0.05 per unit of risk. If you would invest 17,960 in Cairn Homes PLC on November 28, 2024 and sell it today you would lose (100.00) from holding Cairn Homes PLC or give up 0.56% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Cairn Homes PLC vs. Monks Investment Trust
Performance |
| Timeline |
| Cairn Homes PLC |
| Monks Investment Trust |
Cairn Homes and Monks Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cairn Homes and Monks Investment
The main advantage of trading using opposite Cairn Homes and Monks Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cairn Homes 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.| Cairn Homes vs. Elmos Semiconductor SE | Cairn Homes vs. Wizz Air Holdings | Cairn Homes vs. Vietnam Enterprise Investments | Cairn Homes vs. Mobius Investment Trust |
| Monks Investment vs. Fulcrum Metals PLC | Monks Investment vs. AfriTin Mining | Monks Investment vs. Ecclesiastical Insurance Office | Monks Investment vs. GreenX Metals |
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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