Correlation Between Aspen Aerogels and Montana Technologies
Can any of the company-specific risk be diversified away by investing in both Aspen Aerogels and Montana Technologies 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 Aspen Aerogels and Montana Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aspen Aerogels and Montana Technologies, you can compare the effects of market volatilities on Aspen Aerogels and Montana Technologies 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 Aspen Aerogels with a short position of Montana Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aspen Aerogels and Montana Technologies.
Diversification Opportunities for Aspen Aerogels and Montana Technologies
-0.6 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Aspen and Montana is -0.6. Overlapping area represents the amount of risk that can be diversified away by holding Aspen Aerogels and Montana Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montana Technologies and Aspen Aerogels 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 Aspen Aerogels are associated (or correlated) with Montana Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montana Technologies has no effect on the direction of Aspen Aerogels i.e., Aspen Aerogels and Montana Technologies go up and down completely randomly.
Pair Corralation between Aspen Aerogels and Montana Technologies
Given the investment horizon of 90 days Aspen Aerogels is expected to generate 0.81 times more return on investment than Montana Technologies. However, Aspen Aerogels is 1.23 times less risky than Montana Technologies. It trades about 0.05 of its potential returns per unit of risk. Montana Technologies is currently generating about -0.06 per unit of risk. If you would invest 1,048 in Aspen Aerogels on August 26, 2024 and sell it today you would earn a total of 383.00 from holding Aspen Aerogels or generate 36.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 72.69% |
| Values | Daily Returns |
Aspen Aerogels vs. Montana Technologies
Performance |
| Timeline |
| Aspen Aerogels |
| Montana Technologies |
Aspen Aerogels and Montana Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aspen Aerogels and Montana Technologies
The main advantage of trading using opposite Aspen Aerogels and Montana Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aspen Aerogels position performs unexpectedly, Montana Technologies 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 Montana Technologies will offset losses from the drop in Montana Technologies' long position.| Aspen Aerogels vs. Apyx Medical | Aspen Aerogels vs. Century Communities | Aspen Aerogels vs. Ardmore Shpng | Aspen Aerogels vs. American Assets Trust |
| Montana Technologies vs. Gibraltar Industries | Montana Technologies vs. Quanex Building Products | Montana Technologies vs. Jeld Wen Holding | Montana Technologies vs. Interface |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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