Correlation Between Montana Technologies and Caesarstone
Can any of the company-specific risk be diversified away by investing in both Montana Technologies and Caesarstone 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 Caesarstone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Montana Technologies and Caesarstone, you can compare the effects of market volatilities on Montana Technologies and Caesarstone 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 Caesarstone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montana Technologies and Caesarstone.
Diversification Opportunities for Montana Technologies and Caesarstone
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Montana and Caesarstone is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Montana Technologies and Caesarstone in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Caesarstone 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 Caesarstone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Caesarstone has no effect on the direction of Montana Technologies i.e., Montana Technologies and Caesarstone go up and down completely randomly.
Pair Corralation between Montana Technologies and Caesarstone
Given the investment horizon of 90 days Montana Technologies is expected to under-perform the Caesarstone. In addition to that, Montana Technologies is 1.86 times more volatile than Caesarstone. It trades about -0.06 of its total potential returns per unit of risk. Caesarstone is currently generating about 0.03 per unit of volatility. If you would invest 400.00 in Caesarstone on August 28, 2024 and sell it today you would earn a total of 22.00 from holding Caesarstone or generate 5.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 87.08% |
| Values | Daily Returns |
Montana Technologies vs. Caesarstone
Performance |
| Timeline |
| Montana Technologies |
| Caesarstone |
Montana Technologies and Caesarstone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Montana Technologies and Caesarstone
The main advantage of trading using opposite Montana Technologies and Caesarstone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montana Technologies position performs unexpectedly, Caesarstone 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 Caesarstone will offset losses from the drop in Caesarstone's long position.| Montana Technologies vs. Gibraltar Industries | Montana Technologies vs. Quanex Building Products | Montana Technologies vs. Jeld Wen Holding | Montana Technologies vs. Interface |
| Caesarstone vs. Trex Company | Caesarstone vs. Gibraltar Industries | Caesarstone vs. Travis Perkins PLC | Caesarstone vs. Janus International Group |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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