Correlation Between Montauk Renewables and Engie SA

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Can any of the company-specific risk be diversified away by investing in both Montauk Renewables and Engie SA 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 Engie SA into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Montauk Renewables and Engie SA ADR, you can compare the effects of market volatilities on Montauk Renewables and Engie SA 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 Engie SA. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montauk Renewables and Engie SA.

Diversification Opportunities for Montauk Renewables and Engie SA

0.06
  Correlation Coefficient

Significant diversification

The 3 months correlation between Montauk and Engie is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and Engie SA ADR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Engie SA ADR 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 Engie SA. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Engie SA ADR has no effect on the direction of Montauk Renewables i.e., Montauk Renewables and Engie SA go up and down completely randomly.

Pair Corralation between Montauk Renewables and Engie SA

Given the investment horizon of 90 days Montauk Renewables is expected to under-perform the Engie SA. In addition to that, Montauk Renewables is 5.99 times more volatile than Engie SA ADR. It trades about -0.15 of its total potential returns per unit of risk. Engie SA ADR is currently generating about -0.25 per unit of volatility. If you would invest  1,684  in Engie SA ADR on September 1, 2024 and sell it today you would lose (87.00) from holding Engie SA ADR or give up 5.17% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Montauk Renewables  vs.  Engie SA ADR

 Performance 
       Timeline  
Montauk Renewables 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Montauk Renewables are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite weak basic indicators, Montauk Renewables may actually be approaching a critical reversion point that can send shares even higher in December 2024.
Engie SA ADR 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
Very Weak
Over the last 90 days Engie SA ADR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

Montauk Renewables and Engie SA Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Montauk Renewables and Engie SA

The main advantage of trading using opposite Montauk Renewables and Engie SA positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montauk Renewables position performs unexpectedly, Engie SA 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 Engie SA will offset losses from the drop in Engie SA's long position.
The idea behind Montauk Renewables and Engie SA ADR pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.

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