Correlation Between Montauk Renewables and Ecolab
Can any of the company-specific risk be diversified away by investing in both Montauk Renewables and Ecolab 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 Ecolab into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Montauk Renewables and Ecolab Inc, you can compare the effects of market volatilities on Montauk Renewables and Ecolab 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 Ecolab. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montauk Renewables and Ecolab.
Diversification Opportunities for Montauk Renewables and Ecolab
0.53 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Montauk and Ecolab is 0.53. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and Ecolab Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ecolab Inc 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 Ecolab. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ecolab Inc has no effect on the direction of Montauk Renewables i.e., Montauk Renewables and Ecolab go up and down completely randomly.
Pair Corralation between Montauk Renewables and Ecolab
Given the investment horizon of 90 days Montauk Renewables is expected to under-perform the Ecolab. In addition to that, Montauk Renewables is 3.29 times more volatile than Ecolab Inc. It trades about -0.03 of its total potential returns per unit of risk. Ecolab Inc is currently generating about 0.09 per unit of volatility. If you would invest 14,924 in Ecolab Inc on September 3, 2024 and sell it today you would earn a total of 9,953 from holding Ecolab Inc or generate 66.69% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Montauk Renewables vs. Ecolab Inc
Performance |
| Timeline |
| Montauk Renewables |
| Ecolab Inc |
Montauk Renewables and Ecolab Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Montauk Renewables and Ecolab
The main advantage of trading using opposite Montauk Renewables and Ecolab positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montauk Renewables position performs unexpectedly, Ecolab 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 Ecolab will offset losses from the drop in Ecolab's long position.| Montauk Renewables vs. Avista | Montauk Renewables vs. Allete Inc | Montauk Renewables vs. Black Hills | Montauk Renewables vs. Companhia Paranaense de |
| Ecolab vs. Linde plc Ordinary | Ecolab vs. PPG Industries | Ecolab vs. Sherwin Williams Co | Ecolab vs. LyondellBasell Industries NV |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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