Correlation Between Monks Investment and IShares Physical

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

Diversification Opportunities for Monks Investment and IShares Physical

-0.35

Correlation Coefficient

Monks Investment  IShares Physical

Very good diversification

The 3 months correlation between Monks and IShares is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and iShares Physical Platinum in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Physical Platinum 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 IShares Physical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Physical Platinum has no effect on the direction of Monks Investment i.e., Monks Investment and IShares Physical go up and down completely randomly.

Pair Corralation between Monks Investment and IShares Physical

Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.7 times more return on investment than IShares Physical. However, Monks Investment Trust is 1.43 times less risky than IShares Physical. It trades about 0.06 of its potential returns per unit of risk. iShares Physical Platinum is currently generating about -0.02 per unit of risk. If you would invest  95,345  in Monks Investment Trust on September 23, 2024 and sell it today you would earn a total of  29,855  from holding Monks Investment Trust or generate 31.31% return on investment over 90 days.

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

Monks Investment Trust  vs.  iShares Physical Platinum

Monks Investment Trust

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monks Investment Trust are ranked lower than 12 (%) 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.

iShares Physical Platinum

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Physical Platinum are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, IShares Physical is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Monks Investment and IShares Physical

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

The idea behind Monks Investment Trust and iShares Physical Platinum 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.