Correlation Between Monroe Capital and CBH

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

By analyzing existing cross correlation between Monroe Capital Corp and CBH, you can compare the effects of market volatilities on Monroe Capital and CBH 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 Monroe Capital with a short position of CBH. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monroe Capital and CBH.

Diversification Opportunities for Monroe Capital and CBH

0.0

Correlation Coefficient

Monroe Capital  CBH

Pay attention - limited upside

The 3 months correlation between Monroe and CBH is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Monroe Capital Corp and CBH in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CBH and Monroe Capital 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 Monroe Capital Corp are associated (or correlated) with CBH. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CBH has no effect on the direction of Monroe Capital i.e., Monroe Capital and CBH go up and down completely randomly.

Pair Corralation between Monroe Capital and CBH

If you would invest  763.00  in Monroe Capital Corp on September 3, 2024 and sell it today you would earn a total of  89.00  from holding Monroe Capital Corp or generate 11.66% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.56%
Values	Daily Returns

Monroe Capital Corp  vs.  CBH

Monroe Capital Corp

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Monroe Capital Corp are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak fundamental indicators, Monroe Capital may actually be approaching a critical reversion point that can send shares even higher in January 2025.

CBH

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CBH has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental drivers, CBH is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Pair Trading with Monroe Capital and CBH

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

The idea behind Monroe Capital Corp and CBH 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.

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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.