Correlation Between Montauk Renewables and Electricite
Can any of the company-specific risk be diversified away by investing in both Montauk Renewables and Electricite 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 Montauk Renewables and Electricite into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Montauk Renewables and Electricite De France, you can compare the effects of market volatilities on Montauk Renewables and Electricite 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 Montauk Renewables with a short position of Electricite. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montauk Renewables and Electricite.
Diversification Opportunities for Montauk Renewables and Electricite
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Montauk and Electricite is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and Electricite De France in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electricite De France and Montauk Renewables 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 Montauk Renewables are associated (or correlated) with Electricite. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electricite De France has no effect on the direction of Montauk Renewables i.e., Montauk Renewables and Electricite go up and down completely randomly.
Pair Corralation between Montauk Renewables and Electricite
Given the investment horizon of 90 days Montauk Renewables is expected to under-perform the Electricite. In addition to that, Montauk Renewables is 3.95 times more volatile than Electricite De France. It trades about -0.02 of its total potential returns per unit of risk. Electricite De France is currently generating about 0.03 per unit of volatility. If you would invest 248.00 in Electricite De France on August 30, 2024 and sell it today you would earn a total of 7.00 from holding Electricite De France or generate 2.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 26.87% |
| Values | Daily Returns |
Montauk Renewables vs. Electricite De France
Performance |
| Timeline |
| Montauk Renewables |
| Electricite De France |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
Montauk Renewables and Electricite Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Montauk Renewables and Electricite
The main advantage of trading using opposite Montauk Renewables and Electricite positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montauk Renewables position performs unexpectedly, Electricite 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 Electricite will offset losses from the drop in Electricite's long position.| Montauk Renewables vs. Avista | Montauk Renewables vs. Allete Inc | Montauk Renewables vs. Black Hills | Montauk Renewables vs. Companhia Paranaense de |
| Electricite vs. RWE AG PK | Electricite vs. ENEL Societa per | Electricite vs. Companhia Paranaense de | Electricite vs. Iberdrola SA |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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