Correlation Between National Bank and Monks Investment

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

By analyzing existing cross correlation between National Bank of and Monks Investment Trust, you can compare the effects of market volatilities on National Bank and Monks Investment 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 National Bank with a short position of Monks Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Bank and Monks Investment.

Diversification Opportunities for National Bank and Monks Investment

0.15

Correlation Coefficient

National Bank  Monks Investment

Average diversification

The 3 months correlation between National and Monks is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding National Bank of and Monks Investment Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monks Investment Trust and National Bank 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 National Bank of are associated (or correlated) with Monks Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monks Investment Trust has no effect on the direction of National Bank i.e., National Bank and Monks Investment go up and down completely randomly.

Pair Corralation between National Bank and Monks Investment

Assuming the 90 days trading horizon National Bank of is expected to generate 21.91 times more return on investment than Monks Investment. However, National Bank is 21.91 times more volatile than Monks Investment Trust. It trades about 0.08 of its potential returns per unit of risk. Monks Investment Trust is currently generating about -0.06 per unit of risk. If you would invest  278.00  in National Bank of on December 29, 2024 and sell it today you would earn a total of  0.00  from holding National Bank of or generate 0.0% return on investment over 90 days.

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

National Bank of  vs.  Monks Investment Trust

National Bank

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in National Bank of are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, National Bank unveiled solid returns over the last few months and may actually be approaching a breakup point.

Monks Investment Trust

Risk-Adjusted Performance

Very Weak

Over the last 90 days Monks Investment Trust has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Monks Investment is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with National Bank and Monks Investment

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

The idea behind National Bank of and Monks Investment Trust 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 Anywhere module to track or share privately all of your investments from the convenience of any device.