Correlation Between Monks Investment and F5 Networks
Can any of the company-specific risk be diversified away by investing in both Monks Investment and F5 Networks 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 F5 Networks 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 F5 Networks, you can compare the effects of market volatilities on Monks Investment and F5 Networks 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 F5 Networks. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and F5 Networks.
Diversification Opportunities for Monks Investment and F5 Networks
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Monks and 0IL6 is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and F5 Networks in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on F5 Networks 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 F5 Networks. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of F5 Networks has no effect on the direction of Monks Investment i.e., Monks Investment and F5 Networks go up and down completely randomly.
Pair Corralation between Monks Investment and F5 Networks
Assuming the 90 days trading horizon Monks Investment is expected to generate 2.36 times less return on investment than F5 Networks. But when comparing it to its historical volatility, Monks Investment Trust is 1.12 times less risky than F5 Networks. It trades about 0.14 of its potential returns per unit of risk. F5 Networks is currently generating about 0.29 of returns per unit of risk over similar time horizon. If you would invest 24,680 in F5 Networks on September 14, 2024 and sell it today you would earn a total of 1,623 from holding F5 Networks or generate 6.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monks Investment Trust vs. F5 Networks
Performance |
| Timeline |
| Monks Investment Trust |
| F5 Networks |
Monks Investment and F5 Networks Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monks Investment and F5 Networks
The main advantage of trading using opposite Monks Investment and F5 Networks positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment position performs unexpectedly, F5 Networks 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 F5 Networks will offset losses from the drop in F5 Networks' long position.| Monks Investment vs. Fevertree Drinks Plc | Monks Investment vs. AfriTin Mining | Monks Investment vs. GoldMining | Monks Investment vs. Griffin Mining |
| F5 Networks vs. AMG Advanced Metallurgical | F5 Networks vs. Datalogic | F5 Networks vs. BE Semiconductor Industries | F5 Networks vs. Extra Space Storage |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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