Correlation Between Monks Investment and Premier Foods
Can any of the company-specific risk be diversified away by investing in both Monks Investment and Premier Foods 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 Premier Foods 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 Premier Foods PLC, you can compare the effects of market volatilities on Monks Investment and Premier Foods 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 Premier Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and Premier Foods.
Diversification Opportunities for Monks Investment and Premier Foods
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Monks and Premier is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Premier Foods PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Premier Foods 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 Premier Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Premier Foods PLC has no effect on the direction of Monks Investment i.e., Monks Investment and Premier Foods go up and down completely randomly.
Pair Corralation between Monks Investment and Premier Foods
Assuming the 90 days trading horizon Monks Investment is expected to generate 1.51 times less return on investment than Premier Foods. But when comparing it to its historical volatility, Monks Investment Trust is 1.38 times less risky than Premier Foods. It trades about 0.11 of its potential returns per unit of risk. Premier Foods PLC is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 12,844 in Premier Foods PLC on September 14, 2024 and sell it today you would earn a total of 6,056 from holding Premier Foods PLC or generate 47.15% 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. Premier Foods PLC
Performance |
| Timeline |
| Monks Investment Trust |
| Premier Foods PLC |
Monks Investment and Premier Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Monks Investment and Premier Foods
The main advantage of trading using opposite Monks Investment and Premier Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment position performs unexpectedly, Premier Foods 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 Premier Foods will offset losses from the drop in Premier Foods' long position.| Monks Investment vs. Fevertree Drinks Plc | Monks Investment vs. AfriTin Mining | Monks Investment vs. GoldMining | Monks Investment vs. Griffin Mining |
| Premier Foods vs. Samsung Electronics Co | Premier Foods vs. Samsung Electronics Co | Premier Foods vs. Hyundai Motor | Premier Foods vs. Toyota Motor 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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