Correlation Between Monks Investment and Enbridge
Can any of the company-specific risk be diversified away by investing in both Monks Investment and Enbridge 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 Enbridge 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 Enbridge, you can compare the effects of market volatilities on Monks Investment and Enbridge 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 Enbridge. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and Enbridge.
Diversification Opportunities for Monks Investment and Enbridge
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Monks and Enbridge is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Enbridge in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Enbridge 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 Enbridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Enbridge has no effect on the direction of Monks Investment i.e., Monks Investment and Enbridge go up and down completely randomly.
Pair Corralation between Monks Investment and Enbridge
Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.85 times more return on investment than Enbridge. However, Monks Investment Trust is 1.18 times less risky than Enbridge. It trades about -0.08 of its potential returns per unit of risk. Enbridge is currently generating about -0.07 per unit of risk. If you would invest 128,400 in Monks Investment Trust on September 24, 2024 and sell it today you would lose (2,000) from holding Monks Investment Trust or give up 1.56% of portfolio value over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Strong |
Accuracy | 68.18% |
Values | Daily Returns |
Monks Investment Trust vs. Enbridge
Performance |
Timeline |
Monks Investment Trust |
Enbridge |
Monks Investment and Enbridge Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Monks Investment and Enbridge
The main advantage of trading using opposite Monks Investment and Enbridge positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment position performs unexpectedly, Enbridge 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 Enbridge will offset losses from the drop in Enbridge's long position.Monks Investment vs. Samsung Electronics Co | Monks Investment vs. Samsung Electronics Co | Monks Investment vs. Hyundai Motor | Monks Investment vs. Toyota Motor Corp |
Enbridge vs. Zoom Video Communications | Enbridge vs. Endo International PLC | Enbridge vs. Bath Body Works | Enbridge vs. Rio Tinto PLC |
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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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