Correlation Between Montana Technologies and Johnson Controls
Can any of the company-specific risk be diversified away by investing in both Montana Technologies and Johnson Controls 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 Johnson Controls into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Montana Technologies and Johnson Controls International, you can compare the effects of market volatilities on Montana Technologies and Johnson Controls 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 Johnson Controls. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montana Technologies and Johnson Controls.
Diversification Opportunities for Montana Technologies and Johnson Controls
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Montana and Johnson is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Montana Technologies and Johnson Controls International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Johnson Controls Int 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 Johnson Controls. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Johnson Controls Int has no effect on the direction of Montana Technologies i.e., Montana Technologies and Johnson Controls go up and down completely randomly.
Pair Corralation between Montana Technologies and Johnson Controls
Assuming the 90 days horizon Montana Technologies is expected to generate 6.06 times more return on investment than Johnson Controls. However, Montana Technologies is 6.06 times more volatile than Johnson Controls International. It trades about 0.05 of its potential returns per unit of risk. Johnson Controls International is currently generating about 0.13 per unit of risk. If you would invest 60.00 in Montana Technologies on August 27, 2024 and sell it today you would earn a total of 10.00 from holding Montana Technologies or generate 16.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 90.96% |
| Values | Daily Returns |
Montana Technologies vs. Johnson Controls International
Performance |
| Timeline |
| Montana Technologies |
| Johnson Controls Int |
Montana Technologies and Johnson Controls Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Montana Technologies and Johnson Controls
The main advantage of trading using opposite Montana Technologies and Johnson Controls positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montana Technologies position performs unexpectedly, Johnson Controls 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 Johnson Controls will offset losses from the drop in Johnson Controls' long position.| Montana Technologies vs. Quanex Building Products | Montana Technologies vs. Owens Corning | Montana Technologies vs. Trane Technologies plc | Montana Technologies vs. Fortune Brands Innovations |
| Johnson Controls vs. Carrier Global Corp | Johnson Controls vs. Lennox International | Johnson Controls vs. Masco | Johnson Controls vs. Carlisle Companies Incorporated |
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 Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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