Correlation Between Monks Investment and Extra Space
Can any of the company-specific risk be diversified away by investing in both Monks Investment and Extra Space 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 Extra Space 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 Extra Space Storage, you can compare the effects of market volatilities on Monks Investment and Extra Space 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 Extra Space. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and Extra Space.
Diversification Opportunities for Monks Investment and Extra Space
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Monks and Extra is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Extra Space Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Extra Space Storage 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 Extra Space. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Extra Space Storage has no effect on the direction of Monks Investment i.e., Monks Investment and Extra Space go up and down completely randomly.
Pair Corralation between Monks Investment and Extra Space
Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.69 times more return on investment than Extra Space. However, Monks Investment Trust is 1.45 times less risky than Extra Space. It trades about 0.17 of its potential returns per unit of risk. Extra Space Storage is currently generating about -0.1 per unit of risk. If you would invest 125,200 in Monks Investment Trust on September 13, 2024 and sell it today you would earn a total of 4,200 from holding Monks Investment Trust or generate 3.35% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monks Investment Trust vs. Extra Space Storage
Performance |
| Timeline |
| Monks Investment Trust |
| Extra Space Storage |
Monks Investment and Extra Space Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monks Investment and Extra Space
The main advantage of trading using opposite Monks Investment and Extra Space positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment position performs unexpectedly, Extra Space 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 Extra Space will offset losses from the drop in Extra Space's long position.| Monks Investment vs. Fevertree Drinks Plc | Monks Investment vs. AfriTin Mining | Monks Investment vs. GoldMining | Monks Investment vs. Griffin Mining |
| Extra Space vs. Ross Stores | Extra Space vs. Bisichi Mining PLC | Extra Space vs. Hochschild Mining plc | Extra Space vs. AMG Advanced Metallurgical |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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