Correlation Between Amedeo Air and Monks Investment

Can any of the company-specific risk be diversified away by investing in both Amedeo Air and Monks 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 Amedeo Air and Monks Investment into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Amedeo Air Four and Monks Investment Trust, you can compare the effects of market volatilities on Amedeo Air and Monks 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 Amedeo Air with a short position of Monks Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amedeo Air and Monks Investment.

Diversification Opportunities for Amedeo Air and Monks Investment

0.86

Correlation Coefficient

Amedeo Air  Monks Investment

Very poor diversification

The 3 months correlation between Amedeo and Monks is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Amedeo Air Four and Monks Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monks Investment Trust and Amedeo Air 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 Amedeo Air Four are associated (or correlated) with Monks Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monks Investment Trust has no effect on the direction of Amedeo Air i.e., Amedeo Air and Monks Investment go up and down completely randomly.

Pair Corralation between Amedeo Air and Monks Investment

Assuming the 90 days trading horizon Amedeo Air Four is expected to generate 0.62 times more return on investment than Monks Investment. However, Amedeo Air Four is 1.61 times less risky than Monks Investment. It trades about 0.34 of its potential returns per unit of risk. Monks Investment Trust is currently generating about 0.16 per unit of risk. If you would invest  4,962  in Amedeo Air Four on September 25, 2024 and sell it today you would earn a total of  598.00  from holding Amedeo Air Four or generate 12.05% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	100.0%
Values	Daily Returns

Amedeo Air Four  vs.  Monks Investment Trust

Amedeo Air Four

Risk-Adjusted Performance

27 of 100

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Amedeo Air Four are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Amedeo Air may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Monks Investment Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monks Investment Trust are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Monks Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Amedeo Air and Monks Investment

The main advantage of trading using opposite Amedeo Air and Monks Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amedeo Air position performs unexpectedly, Monks 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 Monks Investment will offset losses from the drop in Monks Investment's long position.

The idea behind Amedeo Air Four and Monks Investment Trust 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.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.