Correlation Between Monument Circle and Stagwell

Can any of the company-specific risk be diversified away by investing in both Monument Circle and Stagwell 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 Monument Circle and Stagwell into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Monument Circle Acquisition and Stagwell, you can compare the effects of market volatilities on Monument Circle and Stagwell 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 Monument Circle with a short position of Stagwell. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monument Circle and Stagwell.

Diversification Opportunities for Monument Circle and Stagwell

0.27

Correlation Coefficient

Monument Circle  Stagwell

Modest diversification

The 3 months correlation between Monument and Stagwell is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Monument Circle Acquisition and Stagwell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Stagwell and Monument Circle 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 Monument Circle Acquisition are associated (or correlated) with Stagwell. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Stagwell has no effect on the direction of Monument Circle i.e., Monument Circle and Stagwell go up and down completely randomly.

Pair Corralation between Monument Circle and Stagwell

If you would invest (100.00) in Monument Circle Acquisition on October 3, 2024 and sell it today you would earn a total of  100.00  from holding Monument Circle Acquisition or generate -100.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	0.0%
Values	Daily Returns

Monument Circle Acquisition  vs.  Stagwell

Monument Circle Acqu

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Monument Circle Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Monument Circle is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Stagwell

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Stagwell has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable technical and fundamental indicators, Stagwell is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

Pair Trading with Monument Circle and Stagwell

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

The idea behind Monument Circle Acquisition and Stagwell 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.