Correlation Between Orion Engineered and Monument Circle

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Can any of the company-specific risk be diversified away by investing in both Orion Engineered and Monument Circle 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 Orion Engineered and Monument Circle into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orion Engineered Carbons and Monument Circle Acquisition, you can compare the effects of market volatilities on Orion Engineered and Monument Circle 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 Orion Engineered with a short position of Monument Circle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orion Engineered and Monument Circle.

Diversification Opportunities for Orion Engineered and Monument Circle

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  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Orion and Monument is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Orion Engineered Carbons and Monument Circle Acquisition in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Monument Circle Acqu and Orion Engineered 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 Orion Engineered Carbons are associated (or correlated) with Monument Circle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Monument Circle Acqu has no effect on the direction of Orion Engineered i.e., Orion Engineered and Monument Circle go up and down completely randomly.

Pair Corralation between Orion Engineered and Monument Circle

Considering the 90-day investment horizon Orion Engineered Carbons is expected to generate 0.32 times more return on investment than Monument Circle. However, Orion Engineered Carbons is 3.17 times less risky than Monument Circle. It trades about 0.05 of its potential returns per unit of risk. Monument Circle Acquisition is currently generating about -0.07 per unit of risk. If you would invest  1,446  in Orion Engineered Carbons on December 29, 2023 and sell it today you would earn a total of  906.00  from holding Orion Engineered Carbons or generate 62.66% return on investment over 90 days.
Time Period3 Months [change]
DirectionFlat 
StrengthInsignificant
Accuracy34.14%
ValuesDaily Returns

Orion Engineered Carbons  vs.  Monument Circle Acquisition

 Performance 
       Timeline  
Orion Engineered Carbons 

Risk-Adjusted Performance

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Over the last 90 days Orion Engineered Carbons has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2024. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.
Monument Circle Acqu 

Risk-Adjusted Performance

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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 current stock price disarray, may contribute to short-term losses for the investors.

Orion Engineered and Monument Circle Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Orion Engineered and Monument Circle

The main advantage of trading using opposite Orion Engineered and Monument Circle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orion Engineered position performs unexpectedly, Monument Circle 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 Monument Circle will offset losses from the drop in Monument Circle's long position.
The idea behind Orion Engineered Carbons and Monument Circle Acquisition 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.

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