Correlation Between Monks Investment and American Homes
Can any of the company-specific risk be diversified away by investing in both Monks Investment and American Homes 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 Monks Investment and American Homes into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Monks Investment Trust and American Homes 4, you can compare the effects of market volatilities on Monks Investment and American Homes 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 Monks Investment with a short position of American Homes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and American Homes.
Diversification Opportunities for Monks Investment and American Homes
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Monks and American is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and American Homes 4 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Homes 4 and Monks 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 Monks Investment Trust are associated (or correlated) with American Homes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Homes 4 has no effect on the direction of Monks Investment i.e., Monks Investment and American Homes go up and down completely randomly.
Pair Corralation between Monks Investment and American Homes
Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.75 times more return on investment than American Homes. However, Monks Investment Trust is 1.34 times less risky than American Homes. It trades about 0.07 of its potential returns per unit of risk. American Homes 4 is currently generating about 0.04 per unit of risk. If you would invest 99,696 in Monks Investment Trust on September 2, 2024 and sell it today you would earn a total of 27,304 from holding Monks Investment Trust or generate 27.39% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 91.51% |
| Values | Daily Returns |
Monks Investment Trust vs. American Homes 4
Performance |
| Timeline |
| Monks Investment Trust |
| American Homes 4 |
Monks Investment and American Homes Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monks Investment and American Homes
The main advantage of trading using opposite Monks Investment and American Homes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment position performs unexpectedly, American Homes 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 American Homes will offset losses from the drop in American Homes' long position.| Monks Investment vs. Sealed Air Corp | Monks Investment vs. Schweiter Technologies AG | Monks Investment vs. Bloomsbury Publishing Plc | Monks Investment vs. Check Point Software |
| American Homes vs. Gaztransport et Technigaz | American Homes vs. Fevertree Drinks Plc | American Homes vs. Samsung Electronics Co | American Homes vs. Molson Coors Beverage |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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