Correlation Between CATLIN GROUP and Monks Investment

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

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

Diversification Opportunities for CATLIN GROUP and Monks Investment

-0.86

Correlation Coefficient

CATLIN GROUP  Monks Investment

Pay attention - limited upside

The 3 months correlation between CATLIN and Monks is -0.86. Overlapping area represents the amount of risk that can be diversified away by holding CATLIN GROUP 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 CATLIN GROUP 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 CATLIN GROUP 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 CATLIN GROUP i.e., CATLIN GROUP and Monks Investment go up and down completely randomly.

Pair Corralation between CATLIN GROUP and Monks Investment

Assuming the 90 days trading horizon CATLIN GROUP is expected to generate 1.64 times more return on investment than Monks Investment. However, CATLIN GROUP is 1.64 times more volatile than Monks Investment Trust. It trades about 0.05 of its potential returns per unit of risk. Monks Investment Trust is currently generating about 0.07 per unit of risk. If you would invest  7,400  in CATLIN GROUP on September 13, 2024 and sell it today you would earn a total of  2,000  from holding CATLIN GROUP or generate 27.03% return on investment over 90 days.

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

CATLIN GROUP   vs.  Monks Investment Trust

CATLIN GROUP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CATLIN GROUP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest uncertain performance, the Stock's technical and fundamental indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

Monks Investment Trust

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Monks Investment Trust are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Monks Investment may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with CATLIN GROUP and Monks Investment

The main advantage of trading using opposite CATLIN GROUP and Monks Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CATLIN GROUP 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 CATLIN GROUP 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.