Correlation Between Monks Investment and Sealed Air

Can any of the company-specific risk be diversified away by investing in both Monks Investment and Sealed Air 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 Sealed Air 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 Sealed Air Corp, you can compare the effects of market volatilities on Monks Investment and Sealed Air 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 Sealed Air. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and Sealed Air.

Diversification Opportunities for Monks Investment and Sealed Air

0.57

Correlation Coefficient

Monks Investment  Sealed Air

Very weak diversification

The 3 months correlation between Monks and Sealed is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Sealed Air Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sealed Air Corp 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 Sealed Air. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sealed Air Corp has no effect on the direction of Monks Investment i.e., Monks Investment and Sealed Air go up and down completely randomly.

Pair Corralation between Monks Investment and Sealed Air

Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.66 times more return on investment than Sealed Air. However, Monks Investment Trust is 1.51 times less risky than Sealed Air. It trades about 0.17 of its potential returns per unit of risk. Sealed Air Corp is currently generating about 0.07 per unit of risk. If you would invest  115,200  in Monks Investment Trust on September 2, 2024 and sell it today you would earn a total of  11,800  from holding Monks Investment Trust or generate 10.24% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	90.91%
Values	Daily Returns

Monks Investment Trust  vs.  Sealed Air Corp

Monks Investment Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monks Investment Trust are ranked lower than 13 (%) 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.

Sealed Air Corp

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Sealed Air Corp are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Sealed Air may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Monks Investment and Sealed Air

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

The idea behind Monks Investment Trust and Sealed Air Corp 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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.