Correlation Between Monks Investment and Catalyst Media

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

Diversification Opportunities for Monks Investment and Catalyst Media

0.65

Correlation Coefficient

Monks Investment  Catalyst Media

Poor diversification

The 3 months correlation between Monks and Catalyst is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Catalyst Media Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Catalyst Media Group 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 Catalyst Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Catalyst Media Group has no effect on the direction of Monks Investment i.e., Monks Investment and Catalyst Media go up and down completely randomly.

Pair Corralation between Monks Investment and Catalyst Media

Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.5 times more return on investment than Catalyst Media. However, Monks Investment Trust is 1.99 times less risky than Catalyst Media. It trades about 0.23 of its potential returns per unit of risk. Catalyst Media Group is currently generating about 0.06 per unit of risk. If you would invest  112,400  in Monks Investment Trust on September 4, 2024 and sell it today you would earn a total of  15,400  from holding Monks Investment Trust or generate 13.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.46%
Values	Daily Returns

Monks Investment Trust  vs.  Catalyst Media Group

Monks Investment Trust

Risk-Adjusted Performance

18 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Monks Investment Trust are ranked lower than 18 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Monks Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Catalyst Media Group

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Catalyst Media Group are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Catalyst Media may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Monks Investment and Catalyst Media

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

The idea behind Monks Investment Trust and Catalyst Media Group 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.