Correlation Between Monks Investment and Flow Traders
Can any of the company-specific risk be diversified away by investing in both Monks Investment and Flow Traders 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 Flow Traders 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 Flow Traders NV, you can compare the effects of market volatilities on Monks Investment and Flow Traders 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 Flow Traders. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and Flow Traders.
Diversification Opportunities for Monks Investment and Flow Traders
0.45 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Monks and Flow is 0.45. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Flow Traders NV in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Flow Traders NV 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 Flow Traders. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Flow Traders NV has no effect on the direction of Monks Investment i.e., Monks Investment and Flow Traders go up and down completely randomly.
Pair Corralation between Monks Investment and Flow Traders
Assuming the 90 days trading horizon Monks Investment is expected to generate 2.12 times less return on investment than Flow Traders. But when comparing it to its historical volatility, Monks Investment Trust is 1.55 times less risky than Flow Traders. It trades about 0.18 of its potential returns per unit of risk. Flow Traders NV is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 2,196 in Flow Traders NV on November 2, 2024 and sell it today you would earn a total of 210.00 from holding Flow Traders NV or generate 9.56% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monks Investment Trust vs. Flow Traders NV
Performance |
| Timeline |
| Monks Investment Trust |
| Flow Traders NV |
Monks Investment and Flow Traders Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monks Investment and Flow Traders
The main advantage of trading using opposite Monks Investment and Flow Traders positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment position performs unexpectedly, Flow Traders 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 Flow Traders will offset losses from the drop in Flow Traders' long position.| Monks Investment vs. Taiwan Semiconductor Manufacturing | Monks Investment vs. AcadeMedia AB | Monks Investment vs. Intermediate Capital Group | Monks Investment vs. URU Metals |
| Flow Traders vs. Norwegian Air Shuttle | Flow Traders vs. Polar Capital Technology | Flow Traders vs. Raytheon Technologies Corp | Flow Traders vs. Virgin Wines UK |
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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