Correlation Between Monks Investment and Virgin Wines
Can any of the company-specific risk be diversified away by investing in both Monks Investment and Virgin Wines 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 Virgin Wines 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 Virgin Wines UK, you can compare the effects of market volatilities on Monks Investment and Virgin Wines 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 Virgin Wines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monks Investment and Virgin Wines.
Diversification Opportunities for Monks Investment and Virgin Wines
-0.7 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Monks and Virgin is -0.7. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Virgin Wines UK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virgin Wines UK 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 Virgin Wines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virgin Wines UK has no effect on the direction of Monks Investment i.e., Monks Investment and Virgin Wines go up and down completely randomly.
Pair Corralation between Monks Investment and Virgin Wines
Assuming the 90 days trading horizon Monks Investment Trust is expected to under-perform the Virgin Wines. But the stock apears to be less risky and, when comparing its historical volatility, Monks Investment Trust is 2.31 times less risky than Virgin Wines. The stock trades about -0.06 of its potential returns per unit of risk. The Virgin Wines UK is currently generating about 0.21 of returns per unit of risk over similar time horizon. If you would invest 3,300 in Virgin Wines UK on December 30, 2024 and sell it today you would earn a total of 1,500 from holding Virgin Wines UK or generate 45.45% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Monks Investment Trust vs. Virgin Wines UK
Performance |
Timeline |
Monks Investment Trust |
Virgin Wines UK |
Monks Investment and Virgin Wines Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Monks Investment and Virgin Wines
The main advantage of trading using opposite Monks Investment and Virgin Wines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monks Investment position performs unexpectedly, Virgin Wines 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 Virgin Wines will offset losses from the drop in Virgin Wines' long position.Monks Investment vs. BlackRock Frontiers Investment | Monks Investment vs. Seraphim Space Investment | Monks Investment vs. Scottish American Investment | Monks Investment vs. Monster Beverage Corp |
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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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