Correlation Between Monks Investment and Power Metal

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

Diversification Opportunities for Monks Investment and Power Metal

0.59

Correlation Coefficient

Monks Investment  Power Metal

Very weak diversification

The 3 months correlation between Monks and Power is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Power Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Power Metal Resources 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 Power Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Power Metal Resources has no effect on the direction of Monks Investment i.e., Monks Investment and Power Metal go up and down completely randomly.

Pair Corralation between Monks Investment and Power Metal

Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 0.31 times more return on investment than Power Metal. However, Monks Investment Trust is 3.19 times less risky than Power Metal. It trades about 0.26 of its potential returns per unit of risk. Power Metal Resources is currently generating about 0.06 per unit of risk. If you would invest  112,400  in Monks Investment Trust on April 24, 2025 and sell it today you would earn a total of  19,200  from holding Monks Investment Trust or generate 17.08% return on investment over 90 days.

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

Monks Investment Trust  vs.  Power Metal Resources

Monks Investment Trust

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Monks Investment Trust are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Monks Investment unveiled solid returns over the last few months and may actually be approaching a breakup point.

Power Metal Resources

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Power Metal Resources are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of rather uncertain technical and fundamental indicators, Power Metal exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monks Investment and Power Metal

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

The idea behind Monks Investment Trust and Power Metal Resources 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.