Correlation Between Fevertree Drinks and Monks Investment
Can any of the company-specific risk be diversified away by investing in both Fevertree Drinks 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 Fevertree Drinks and Monks Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fevertree Drinks Plc and Monks Investment Trust, you can compare the effects of market volatilities on Fevertree Drinks 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 Fevertree Drinks with a short position of Monks Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fevertree Drinks and Monks Investment.
Diversification Opportunities for Fevertree Drinks and Monks Investment
-0.77 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Fevertree and Monks is -0.77. Overlapping area represents the amount of risk that can be diversified away by holding Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks 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 Fevertree Drinks i.e., Fevertree Drinks and Monks Investment go up and down completely randomly.
Pair Corralation between Fevertree Drinks and Monks Investment
Assuming the 90 days trading horizon Fevertree Drinks is expected to generate 1.82 times less return on investment than Monks Investment. In addition to that, Fevertree Drinks is 1.44 times more volatile than Monks Investment Trust. It trades about 0.05 of its total potential returns per unit of risk. Monks Investment Trust is currently generating about 0.14 per unit of volatility. If you would invest 126,000 in Monks Investment Trust on September 14, 2024 and sell it today you would earn a total of 3,400 from holding Monks Investment Trust or generate 2.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fevertree Drinks Plc vs. Monks Investment Trust
Performance |
| Timeline |
| Fevertree Drinks Plc |
| Monks Investment Trust |
Fevertree Drinks and Monks Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fevertree Drinks and Monks Investment
The main advantage of trading using opposite Fevertree Drinks and Monks Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fevertree Drinks 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.| Fevertree Drinks vs. Roper Technologies | Fevertree Drinks vs. Sunny Optical Technology | Fevertree Drinks vs. Accsys Technologies PLC | Fevertree Drinks vs. Metals Exploration Plc |
| 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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