Correlation Between Monks Investment and Oakley Capital

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

Diversification Opportunities for Monks Investment and Oakley Capital

0.23

Correlation Coefficient

Monks Investment  Oakley Capital

Modest diversification

The 3 months correlation between Monks and Oakley is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Oakley Capital Investments in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakley Capital Inves 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 Oakley Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakley Capital Inves has no effect on the direction of Monks Investment i.e., Monks Investment and Oakley Capital go up and down completely randomly.

Pair Corralation between Monks Investment and Oakley Capital

Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 2.02 times more return on investment than Oakley Capital. However, Monks Investment is 2.02 times more volatile than Oakley Capital Investments. It trades about -0.06 of its potential returns per unit of risk. Oakley Capital Investments is currently generating about -0.13 per unit of risk. If you would invest  125,000  in Monks Investment Trust on December 30, 2024 and sell it today you would lose (6,200) from holding Monks Investment Trust or give up 4.96% of portfolio value over 90 days.

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

Monks Investment Trust  vs.  Oakley Capital Investments

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 newest stock price uproar, may contribute to short-horizon losses for the private investors.

Oakley Capital Inves

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oakley Capital Investments has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound technical and fundamental indicators, Oakley Capital is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Monks Investment and Oakley Capital

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

The idea behind Monks Investment Trust and Oakley Capital Investments 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.