Correlation Between Monks Investment and LBG Media

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Can any of the company-specific risk be diversified away by investing in both Monks Investment and LBG Media 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 LBG Media 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 LBG Media PLC, you can compare the effects of market volatilities on Monks Investment and LBG Media 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 LBG Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and LBG Media.

Diversification Opportunities for Monks Investment and LBG Media

MonksLBGDiversified AwayMonksLBGDiversified Away100%
-0.62
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Monks and LBG is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and LBG Media PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on LBG Media PLC 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 LBG Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of LBG Media PLC has no effect on the direction of Monks Investment i.e., Monks Investment and LBG Media go up and down completely randomly.

Pair Corralation between Monks Investment and LBG Media

Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.37 times more return on investment than LBG Media. However, Monks Investment Trust is 2.71 times less risky than LBG Media. It trades about -0.08 of its potential returns per unit of risk. LBG Media PLC is currently generating about -0.25 per unit of risk. If you would invest  132,200  in Monks Investment Trust on November 30, 2024 and sell it today you would lose (2,600) from holding Monks Investment Trust or give up 1.97% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Monks Investment Trust  vs.  LBG Media PLC

 Performance 
JavaScript chart by amCharts 3.21.15Dec2025Feb -15-10-505
JavaScript chart by amCharts 3.21.15MNKS LBG
       Timeline  
Monks Investment Trust 

Risk-Adjusted Performance

Weak

 
Weak
 
Strong
Compared to the overall equity markets, risk-adjusted returns on investments in Monks Investment Trust are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Monks Investment is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.
JavaScript chart by amCharts 3.21.15JanFebFeb1,1501,2001,2501,3001,350
LBG Media PLC 

Risk-Adjusted Performance

Very Weak

 
Weak
 
Strong
Over the last 90 days LBG Media PLC has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in March 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
JavaScript chart by amCharts 3.21.15JanFebFeb100110120130140

Monks Investment and LBG Media Volatility Contrast

   Predicted Return Density   
JavaScript chart by amCharts 3.21.15-3.31-2.48-1.65-0.82-0.01380.81.632.473.314.15 0.050.100.150.200.250.300.35
JavaScript chart by amCharts 3.21.15MNKS LBG
       Returns  

Pair Trading with Monks Investment and LBG Media

The main advantage of trading using opposite Monks Investment and LBG Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment position performs unexpectedly, LBG Media 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 LBG Media will offset losses from the drop in LBG Media's long position.
The idea behind Monks Investment Trust and LBG Media PLC pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.

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