Correlation Between Monument Circle and Kontoor Brands

Can any of the company-specific risk be diversified away by investing in both Monument Circle and Kontoor Brands 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 Monument Circle and Kontoor Brands into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Monument Circle Acquisition and Kontoor Brands, you can compare the effects of market volatilities on Monument Circle and Kontoor Brands 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 Monument Circle with a short position of Kontoor Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monument Circle and Kontoor Brands.

Diversification Opportunities for Monument Circle and Kontoor Brands

-0.4

Correlation Coefficient

Monument Circle  Kontoor Brands

Very good diversification

The 3 months correlation between Monument and Kontoor is -0.4. Overlapping area represents the amount of risk that can be diversified away by holding Monument Circle Acquisition and Kontoor Brands in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kontoor Brands and Monument Circle 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 Monument Circle Acquisition are associated (or correlated) with Kontoor Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kontoor Brands has no effect on the direction of Monument Circle i.e., Monument Circle and Kontoor Brands go up and down completely randomly.

Pair Corralation between Monument Circle and Kontoor Brands

If you would invest  7,826  in Kontoor Brands on September 20, 2024 and sell it today you would earn a total of  802.00  from holding Kontoor Brands or generate 10.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

Monument Circle Acquisition  vs.  Kontoor Brands

Monument Circle Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monument Circle Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Monument Circle is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Kontoor Brands

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Kontoor Brands are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat inconsistent basic indicators, Kontoor Brands may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Monument Circle and Kontoor Brands

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

The idea behind Monument Circle Acquisition and Kontoor Brands 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.