Correlation Between Montana Technologies and Aspen Aerogels
Can any of the company-specific risk be diversified away by investing in both Montana Technologies and Aspen Aerogels 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 Montana Technologies and Aspen Aerogels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Montana Technologies and Aspen Aerogels, you can compare the effects of market volatilities on Montana Technologies and Aspen Aerogels 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 Montana Technologies with a short position of Aspen Aerogels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montana Technologies and Aspen Aerogels.
Diversification Opportunities for Montana Technologies and Aspen Aerogels
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Montana and Aspen is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Montana Technologies and Aspen Aerogels in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aspen Aerogels and Montana Technologies 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 Montana Technologies are associated (or correlated) with Aspen Aerogels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aspen Aerogels has no effect on the direction of Montana Technologies i.e., Montana Technologies and Aspen Aerogels go up and down completely randomly.
Pair Corralation between Montana Technologies and Aspen Aerogels
Given the investment horizon of 90 days Montana Technologies is expected to under-perform the Aspen Aerogels. In addition to that, Montana Technologies is 1.34 times more volatile than Aspen Aerogels. It trades about -0.06 of its total potential returns per unit of risk. Aspen Aerogels is currently generating about 0.03 per unit of volatility. If you would invest 1,121 in Aspen Aerogels on August 27, 2024 and sell it today you would earn a total of 310.00 from holding Aspen Aerogels or generate 27.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 36.49% |
| Values | Daily Returns |
Montana Technologies vs. Aspen Aerogels
Performance |
| Timeline |
| Montana Technologies |
| Aspen Aerogels |
Montana Technologies and Aspen Aerogels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Montana Technologies and Aspen Aerogels
The main advantage of trading using opposite Montana Technologies and Aspen Aerogels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montana Technologies position performs unexpectedly, Aspen Aerogels 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 Aspen Aerogels will offset losses from the drop in Aspen Aerogels' long position.| Montana Technologies vs. Merit Medical Systems | Montana Technologies vs. Skechers USA | Montana Technologies vs. Teleflex Incorporated | Montana Technologies vs. World Houseware Limited |
| Aspen Aerogels vs. Apyx Medical | Aspen Aerogels vs. Century Communities | Aspen Aerogels vs. Ardmore Shpng | Aspen Aerogels vs. American Assets Trust |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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