Correlation Between Caesarstone and Montana Technologies
Can any of the company-specific risk be diversified away by investing in both Caesarstone 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 Caesarstone and Montana Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Caesarstone and Montana Technologies, you can compare the effects of market volatilities on Caesarstone 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 Caesarstone with a short position of Montana Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caesarstone and Montana Technologies.
Diversification Opportunities for Caesarstone and Montana Technologies
-0.52 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Caesarstone and Montana is -0.52. Overlapping area represents the amount of risk that can be diversified away by holding Caesarstone and Montana Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montana Technologies and Caesarstone 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 Caesarstone 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 Caesarstone i.e., Caesarstone and Montana Technologies go up and down completely randomly.
Pair Corralation between Caesarstone and Montana Technologies
Given the investment horizon of 90 days Caesarstone is expected to under-perform the Montana Technologies. But the stock apears to be less risky and, when comparing its historical volatility, Caesarstone is 1.27 times less risky than Montana Technologies. The stock trades about -0.04 of its potential returns per unit of risk. The Montana Technologies is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 580.00 in Montana Technologies on August 30, 2024 and sell it today you would earn a total of 241.00 from holding Montana Technologies or generate 41.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 97.73% |
| Values | Daily Returns |
Caesarstone vs. Montana Technologies
Performance |
| Timeline |
| Caesarstone |
| Montana Technologies |
Caesarstone and Montana Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Caesarstone and Montana Technologies
The main advantage of trading using opposite Caesarstone and Montana Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caesarstone 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.| Caesarstone vs. Gibraltar Industries | Caesarstone vs. Quanex Building Products | Caesarstone vs. Jeld Wen Holding | Caesarstone vs. Perma Pipe International Holdings |
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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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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