Correlation Between Monks Investment and Intermediate Capital

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

Diversification Opportunities for Monks Investment and Intermediate Capital

0.22

Correlation Coefficient

Monks Investment  Intermediate Capital

Modest diversification

The 3 months correlation between Monks and Intermediate is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Intermediate Capital Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intermediate Capital 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 Intermediate Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intermediate Capital has no effect on the direction of Monks Investment i.e., Monks Investment and Intermediate Capital go up and down completely randomly.

Pair Corralation between Monks Investment and Intermediate Capital

Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.44 times more return on investment than Intermediate Capital. However, Monks Investment Trust is 2.27 times less risky than Intermediate Capital. It trades about 0.18 of its potential returns per unit of risk. Intermediate Capital Group is currently generating about 0.07 per unit of risk. If you would invest  119,800  in Monks Investment Trust on October 25, 2024 and sell it today you would earn a total of  12,200  from holding Monks Investment Trust or generate 10.18% return on investment over 90 days.

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

Monks Investment Trust  vs.  Intermediate Capital Group

Monks Investment Trust

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Monks Investment Trust are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively unsteady basic indicators, Monks Investment may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Intermediate Capital

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Intermediate Capital Group are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Intermediate Capital may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Monks Investment and Intermediate Capital

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

The idea behind Monks Investment Trust and Intermediate Capital Group 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..