Correlation Between Monks Investment and Temple Bar

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

Diversification Opportunities for Monks Investment and Temple Bar

0.96

Correlation Coefficient

Monks Investment  Temple Bar

Almost no diversification

The 3 months correlation between Monks and Temple is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Monks Investment Trust and Temple Bar Investment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Temple Bar Investment 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 Temple Bar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Temple Bar Investment has no effect on the direction of Monks Investment i.e., Monks Investment and Temple Bar go up and down completely randomly.

Pair Corralation between Monks Investment and Temple Bar

Assuming the 90 days trading horizon Monks Investment Trust is expected to generate 1.73 times more return on investment than Temple Bar. However, Monks Investment is 1.73 times more volatile than Temple Bar Investment. It trades about 0.26 of its potential returns per unit of risk. Temple Bar Investment is currently generating about 0.41 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	Very Strong
Accuracy	100.0%
Values	Daily Returns

Monks Investment Trust  vs.  Temple Bar Investment

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.

Temple Bar Investment

Risk-Adjusted Performance

Very Strong

Compared to the overall equity markets, risk-adjusted returns on investments in Temple Bar Investment are ranked lower than 32 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Temple Bar unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Monks Investment and Temple Bar

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

The idea behind Monks Investment Trust and Temple Bar Investment 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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.