Correlation Between Monks Investment and EJF Investments
Can any of the company-specific risk be diversified away by investing in both Monks Investment and EJF Investments 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 EJF Investments 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 EJF Investments, you can compare the effects of market volatilities on Monks Investment and EJF Investments 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 EJF Investments. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and EJF Investments.
Diversification Opportunities for Monks Investment and EJF Investments
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Monks and EJF is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and EJF Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EJF Investments 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 EJF Investments. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EJF Investments has no effect on the direction of Monks Investment i.e., Monks Investment and EJF Investments go up and down completely randomly.
Pair Corralation between Monks Investment and EJF Investments
Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.71 times more return on investment than EJF Investments. However, Monks Investment Trust is 1.4 times less risky than EJF Investments. It trades about 0.05 of its potential returns per unit of risk. EJF Investments is currently generating about 0.0 per unit of risk. If you would invest 100,495 in Monks Investment Trust on October 12, 2024 and sell it today you would earn a total of 24,705 from holding Monks Investment Trust or generate 24.58% 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. EJF Investments
Performance |
| Timeline |
| Monks Investment Trust |
| EJF Investments |
Monks Investment and EJF Investments Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monks Investment and EJF Investments
The main advantage of trading using opposite Monks Investment and EJF Investments positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment position performs unexpectedly, EJF Investments 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 EJF Investments will offset losses from the drop in EJF Investments' long position.| Monks Investment vs. Aberdeen Diversified Income | Monks Investment vs. BlackRock Frontiers Investment | Monks Investment vs. Datagroup SE | Monks Investment vs. EJF Investments |
| EJF Investments vs. Universal Music Group | EJF Investments vs. Liontrust Asset Management | EJF Investments vs. FC Investment Trust | EJF Investments vs. Monks Investment Trust |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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