Correlation Between Monks Investment and Mercantile Investment
Can any of the company-specific risk be diversified away by investing in both Monks Investment and Mercantile 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 Mercantile 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 The Mercantile Investment, you can compare the effects of market volatilities on Monks Investment and Mercantile 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 Mercantile Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and Mercantile Investment.
Diversification Opportunities for Monks Investment and Mercantile Investment
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Monks and Mercantile is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and The Mercantile Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on The Mercantile 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 Mercantile Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of The Mercantile Investment has no effect on the direction of Monks Investment i.e., Monks Investment and Mercantile Investment go up and down completely randomly.
Pair Corralation between Monks Investment and Mercantile Investment
Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.82 times more return on investment than Mercantile Investment. However, Monks Investment Trust is 1.22 times less risky than Mercantile Investment. It trades about 0.33 of its potential returns per unit of risk. The Mercantile Investment is currently generating about 0.01 per unit of risk. If you would invest 119,000 in Monks Investment Trust on August 30, 2024 and sell it today you would earn a total of 8,400 from holding Monks Investment Trust or generate 7.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.65% |
| Values | Daily Returns |
Monks Investment Trust vs. The Mercantile Investment
Performance |
| Timeline |
| Monks Investment Trust |
| The Mercantile Investment |
Monks Investment and Mercantile Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monks Investment and Mercantile Investment
The main advantage of trading using opposite Monks Investment and Mercantile Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment position performs unexpectedly, Mercantile 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 Mercantile Investment will offset losses from the drop in Mercantile Investment's long position.| Monks Investment vs. EVS Broadcast Equipment | Monks Investment vs. St Galler Kantonalbank | Monks Investment vs. Ashtead Technology Holdings | Monks Investment vs. CleanTech Lithium plc |
| Mercantile Investment vs. Anglesey Mining | Mercantile Investment vs. AMG Advanced Metallurgical | Mercantile Investment vs. Coeur Mining | Mercantile Investment vs. Capital Drilling |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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