Correlation Between Monks Investment and Waste Management
Can any of the company-specific risk be diversified away by investing in both Monks Investment and Waste Management 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 Waste Management 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 Waste Management, you can compare the effects of market volatilities on Monks Investment and Waste Management 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 Waste Management. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and Waste Management.
Diversification Opportunities for Monks Investment and Waste Management
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Monks and Waste is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Waste Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Waste Management 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 Waste Management. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Waste Management has no effect on the direction of Monks Investment i.e., Monks Investment and Waste Management go up and down completely randomly.
Pair Corralation between Monks Investment and Waste Management
Assuming the 90 days trading horizon Monks Investment is expected to generate 1.29 times less return on investment than Waste Management. But when comparing it to its historical volatility, Monks Investment Trust is 1.08 times less risky than Waste Management. It trades about 0.06 of its potential returns per unit of risk. Waste Management is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 16,287 in Waste Management on August 30, 2024 and sell it today you would earn a total of 6,645 from holding Waste Management or generate 40.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Monks Investment Trust vs. Waste Management
Performance |
| Timeline |
| Monks Investment Trust |
| Waste Management |
Monks Investment and Waste Management Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monks Investment and Waste Management
The main advantage of trading using opposite Monks Investment and Waste Management positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment position performs unexpectedly, Waste Management 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 Waste Management will offset losses from the drop in Waste Management's long position.| Monks Investment vs. Toyota Motor Corp | Monks Investment vs. Neometals | Monks Investment vs. Coor Service Management | Monks Investment vs. JPMorgan ETFs ICAV |
| Waste Management vs. Lendinvest PLC | Waste Management vs. Neometals | Waste Management vs. Albion Technology General | Waste Management vs. Jupiter Fund Management |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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