Correlation Between Blue Moon and Monarch Services

Can any of the company-specific risk be diversified away by investing in both Blue Moon and Monarch Services 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 Blue Moon and Monarch Services into the same portfolio, which is an essential part of the fundamental portfolio management process.

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

Diversification Opportunities for Blue Moon and Monarch Services

0.0

Correlation Coefficient

Blue Moon  Monarch Services

Pay attention - limited upside

The 3 months correlation between Blue and Monarch is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Blue Moon Metals and Monarch Services in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monarch Services and Blue Moon 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 Blue Moon Metals are associated (or correlated) with Monarch Services. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monarch Services has no effect on the direction of Blue Moon i.e., Blue Moon and Monarch Services go up and down completely randomly.

Pair Corralation between Blue Moon and Monarch Services

If you would invest  20.00  in Blue Moon Metals on September 23, 2024 and sell it today you would earn a total of  5.00  from holding Blue Moon Metals or generate 25.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	98.48%
Values	Daily Returns

Blue Moon Metals  vs.  Monarch Services

Blue Moon Metals

Risk-Adjusted Performance

7 of 100

OK

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

Monarch Services

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monarch Services has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong technical indicators, Monarch Services is not utilizing all of its potentials. The latest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Blue Moon and Monarch Services

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

The idea behind Blue Moon Metals and Monarch Services 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.