Correlation Between Monitor Ventures and American Battery

Can any of the company-specific risk be diversified away by investing in both Monitor Ventures and American Battery 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 Monitor Ventures and American Battery into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Monitor Ventures and American Battery Metals, you can compare the effects of market volatilities on Monitor Ventures and American Battery 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 Monitor Ventures with a short position of American Battery. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monitor Ventures and American Battery.

Diversification Opportunities for Monitor Ventures and American Battery

-0.54

Correlation Coefficient

Monitor Ventures  American Battery

Excellent diversification

The 3 months correlation between Monitor and American is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Monitor Ventures and American Battery Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Battery Metals and Monitor Ventures 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 Monitor Ventures are associated (or correlated) with American Battery. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Battery Metals has no effect on the direction of Monitor Ventures i.e., Monitor Ventures and American Battery go up and down completely randomly.

Pair Corralation between Monitor Ventures and American Battery

Assuming the 90 days horizon Monitor Ventures is expected to generate 11.15 times more return on investment than American Battery. However, Monitor Ventures is 11.15 times more volatile than American Battery Metals. It trades about 0.06 of its potential returns per unit of risk. American Battery Metals is currently generating about 0.06 per unit of risk. If you would invest  10.00  in Monitor Ventures on September 4, 2024 and sell it today you would lose (1.00) from holding Monitor Ventures or give up 10.0% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	30.65%
Values	Daily Returns

Monitor Ventures  vs.  American Battery Metals

Monitor Ventures

Risk-Adjusted Performance

7 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monitor Ventures are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly weak basic indicators, Monitor Ventures reported solid returns over the last few months and may actually be approaching a breakup point.

American Battery Metals

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days American Battery Metals has generated negative risk-adjusted returns adding no value to investors with long positions. Despite quite persistent primary indicators, American Battery is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Monitor Ventures and American Battery

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

The idea behind Monitor Ventures and American Battery Metals 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.