Correlation Between Monks Investment and Pets At

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

Diversification Opportunities for Monks Investment and Pets At

-0.8

Correlation Coefficient

Monks Investment  Pets At

Pay attention - limited upside

The 3 months correlation between Monks and Pets is -0.8. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Pets at Home in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pets at Home 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 Pets At. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pets at Home has no effect on the direction of Monks Investment i.e., Monks Investment and Pets At go up and down completely randomly.

Pair Corralation between Monks Investment and Pets At

Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.31 times more return on investment than Pets At. However, Monks Investment Trust is 3.19 times less risky than Pets At. It trades about 0.2 of its potential returns per unit of risk. Pets at Home is currently generating about -0.14 per unit of risk. If you would invest  115,000  in Monks Investment Trust on September 13, 2024 and sell it today you would earn a total of  12,200  from holding Monks Investment Trust or generate 10.61% return on investment over 90 days.

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

Monks Investment Trust  vs.  Pets at Home

Monks Investment Trust

Risk-Adjusted Performance

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Monks Investment Trust are ranked lower than 15 (%) 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 January 2025.

Pets at Home

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pets at Home has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's basic indicators remain comparatively stable which may send shares a bit higher in January 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Pair Trading with Monks Investment and Pets At

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

The idea behind Monks Investment Trust and Pets at Home 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.