Correlation Between Montauk Renewables and Old Republic
Can any of the company-specific risk be diversified away by investing in both Montauk Renewables and Old Republic 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 Old Republic into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Montauk Renewables and Old Republic International, you can compare the effects of market volatilities on Montauk Renewables and Old Republic 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 Old Republic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montauk Renewables and Old Republic.
Diversification Opportunities for Montauk Renewables and Old Republic
-0.36 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Montauk and Old is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and Old Republic International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Old Republic Interna 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 Old Republic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Old Republic Interna has no effect on the direction of Montauk Renewables i.e., Montauk Renewables and Old Republic go up and down completely randomly.
Pair Corralation between Montauk Renewables and Old Republic
Given the investment horizon of 90 days Montauk Renewables is expected to under-perform the Old Republic. In addition to that, Montauk Renewables is 4.03 times more volatile than Old Republic International. It trades about -0.02 of its total potential returns per unit of risk. Old Republic International is currently generating about 0.11 per unit of volatility. If you would invest 2,673 in Old Republic International on August 29, 2024 and sell it today you would earn a total of 1,226 from holding Old Republic International or generate 45.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Montauk Renewables vs. Old Republic International
Performance |
| Timeline |
| Montauk Renewables |
| Old Republic Interna |
Montauk Renewables and Old Republic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Montauk Renewables and Old Republic
The main advantage of trading using opposite Montauk Renewables and Old Republic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montauk Renewables position performs unexpectedly, Old Republic 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 Old Republic will offset losses from the drop in Old Republic's long position.| Montauk Renewables vs. Avista | Montauk Renewables vs. Allete Inc | Montauk Renewables vs. Black Hills | Montauk Renewables vs. Companhia Paranaense de |
| Old Republic vs. Global Indemnity PLC | Old Republic vs. Erie Indemnity | Old Republic vs. AMERISAFE | Old Republic vs. Diamond Hill Investment |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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