Correlation Between Montauk Renewables and Sensient Technologies
Can any of the company-specific risk be diversified away by investing in both Montauk Renewables and Sensient 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 Montauk Renewables and Sensient Technologies into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Montauk Renewables and Sensient Technologies, you can compare the effects of market volatilities on Montauk Renewables and Sensient 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 Montauk Renewables with a short position of Sensient Technologies. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montauk Renewables and Sensient Technologies.
Diversification Opportunities for Montauk Renewables and Sensient Technologies
0.37 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Montauk and Sensient is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and Sensient Technologies in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sensient Technologies 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 Sensient Technologies. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sensient Technologies has no effect on the direction of Montauk Renewables i.e., Montauk Renewables and Sensient Technologies go up and down completely randomly.
Pair Corralation between Montauk Renewables and Sensient Technologies
Given the investment horizon of 90 days Montauk Renewables is expected to under-perform the Sensient Technologies. In addition to that, Montauk Renewables is 2.56 times more volatile than Sensient Technologies. It trades about -0.03 of its total potential returns per unit of risk. Sensient Technologies is currently generating about 0.02 per unit of volatility. If you would invest 7,130 in Sensient Technologies on September 3, 2024 and sell it today you would earn a total of 634.00 from holding Sensient Technologies or generate 8.89% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Montauk Renewables vs. Sensient Technologies
Performance |
| Timeline |
| Montauk Renewables |
| Sensient Technologies |
Montauk Renewables and Sensient Technologies Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Montauk Renewables and Sensient Technologies
The main advantage of trading using opposite Montauk Renewables and Sensient Technologies positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montauk Renewables position performs unexpectedly, Sensient 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 Sensient Technologies will offset losses from the drop in Sensient Technologies' long position.| Montauk Renewables vs. Avista | Montauk Renewables vs. Allete Inc | Montauk Renewables vs. Black Hills | Montauk Renewables vs. Companhia Paranaense de |
| Sensient Technologies vs. SPACE | Sensient Technologies vs. Bayview Acquisition Corp | Sensient Technologies vs. T Rowe Price | Sensient Technologies vs. Ampleforth |
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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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