Correlation Between Monks Investment and Hansa Investment
Can any of the company-specific risk be diversified away by investing in both Monks Investment and Hansa Investment 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 Hansa Investment 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 Hansa Investment, you can compare the effects of market volatilities on Monks Investment and Hansa Investment 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 Hansa Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and Hansa Investment.
Diversification Opportunities for Monks Investment and Hansa Investment
0.23 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Monks and Hansa is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Hansa Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hansa Investment 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 Hansa Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hansa Investment has no effect on the direction of Monks Investment i.e., Monks Investment and Hansa Investment go up and down completely randomly.
Pair Corralation between Monks Investment and Hansa Investment
Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.79 times more return on investment than Hansa Investment. However, Monks Investment Trust is 1.26 times less risky than Hansa Investment. It trades about 0.42 of its potential returns per unit of risk. Hansa Investment is currently generating about -0.12 per unit of risk. If you would invest 118,200 in Monks Investment Trust on August 28, 2024 and sell it today you would earn a total of 10,200 from holding Monks Investment Trust or generate 8.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Monks Investment Trust vs. Hansa Investment
Performance |
| Timeline |
| Monks Investment Trust |
| Hansa Investment |
Monks Investment and Hansa Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monks Investment and Hansa Investment
The main advantage of trading using opposite Monks Investment and Hansa Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment position performs unexpectedly, Hansa Investment 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 Hansa Investment will offset losses from the drop in Hansa Investment's long position.| Monks Investment vs. Hochschild Mining plc | Monks Investment vs. Bisichi Mining PLC | Monks Investment vs. Anglesey Mining | Monks Investment vs. International Biotechnology Trust |
| Hansa Investment vs. CATCo Reinsurance Opportunities | Hansa Investment vs. BH Macro Limited | Hansa Investment vs. TMT Investments PLC | Hansa Investment vs. Intermediate Capital Group |
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 Stocks Directory module to find actively traded stocks across global markets.
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