Correlation Between Monks Investment and Optima Health
Can any of the company-specific risk be diversified away by investing in both Monks Investment and Optima Health 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 Optima Health 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 Optima Health plc, you can compare the effects of market volatilities on Monks Investment and Optima Health 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 Optima Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and Optima Health.
Diversification Opportunities for Monks Investment and Optima Health
-0.47 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Monks and Optima is -0.47. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Optima Health plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Optima Health 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 Optima Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Optima Health plc has no effect on the direction of Monks Investment i.e., Monks Investment and Optima Health go up and down completely randomly.
Pair Corralation between Monks Investment and Optima Health
Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.87 times more return on investment than Optima Health. However, Monks Investment Trust is 1.16 times less risky than Optima Health. It trades about 0.05 of its potential returns per unit of risk. Optima Health plc is currently generating about -0.07 per unit of risk. If you would invest 100,295 in Monks Investment Trust on October 16, 2024 and sell it today you would earn a total of 25,105 from holding Monks Investment Trust or generate 25.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 15.26% |
| Values | Daily Returns |
Monks Investment Trust vs. Optima Health plc
Performance |
| Timeline |
| Monks Investment Trust |
| Optima Health plc |
Monks Investment and Optima Health Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monks Investment and Optima Health
The main advantage of trading using opposite Monks Investment and Optima Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment position performs unexpectedly, Optima Health 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 Optima Health will offset losses from the drop in Optima Health's long position.| Monks Investment vs. GreenX Metals | Monks Investment vs. AMG Advanced Metallurgical | Monks Investment vs. Gaztransport et Technigaz | Monks Investment vs. Prosiebensat 1 Media |
| Optima Health vs. FinecoBank SpA | Optima Health vs. TBC Bank Group | Optima Health vs. Metro Bank PLC | Optima Health vs. SoftBank Group Corp |
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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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