Correlation Between Monks Investment and Bodycote PLC
Can any of the company-specific risk be diversified away by investing in both Monks Investment and Bodycote PLC 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 Bodycote PLC 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 Bodycote PLC, you can compare the effects of market volatilities on Monks Investment and Bodycote PLC 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 Bodycote PLC. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and Bodycote PLC.
Diversification Opportunities for Monks Investment and Bodycote PLC
0.71 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Monks and Bodycote is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Bodycote PLC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bodycote PLC 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 Bodycote PLC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bodycote PLC has no effect on the direction of Monks Investment i.e., Monks Investment and Bodycote PLC go up and down completely randomly.
Pair Corralation between Monks Investment and Bodycote PLC
Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.46 times more return on investment than Bodycote PLC. However, Monks Investment Trust is 2.16 times less risky than Bodycote PLC. It trades about 0.16 of its potential returns per unit of risk. Bodycote PLC is currently generating about 0.06 per unit of risk. If you would invest 116,000 in Monks Investment Trust on September 25, 2024 and sell it today you would earn a total of 10,400 from holding Monks Investment Trust or generate 8.97% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Monks Investment Trust vs. Bodycote PLC
Performance |
Timeline |
Monks Investment Trust |
Bodycote PLC |
Monks Investment and Bodycote PLC Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Monks Investment and Bodycote PLC
The main advantage of trading using opposite Monks Investment and Bodycote PLC positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment position performs unexpectedly, Bodycote PLC 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 Bodycote PLC will offset losses from the drop in Bodycote PLC's long position.Monks Investment vs. Roper Technologies | Monks Investment vs. Naked Wines plc | Monks Investment vs. Extra Space Storage | Monks Investment vs. Ion Beam Applications |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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