Correlation Between UNITIL and Montauk Renewables
Can any of the company-specific risk be diversified away by investing in both UNITIL and Montauk Renewables 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 UNITIL and Montauk Renewables into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between UNITIL and Montauk Renewables, you can compare the effects of market volatilities on UNITIL and Montauk Renewables 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 UNITIL with a short position of Montauk Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of UNITIL and Montauk Renewables.
Diversification Opportunities for UNITIL and Montauk Renewables
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between UNITIL and Montauk is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding UNITIL and Montauk Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montauk Renewables and UNITIL 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 UNITIL are associated (or correlated) with Montauk Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montauk Renewables has no effect on the direction of UNITIL i.e., UNITIL and Montauk Renewables go up and down completely randomly.
Pair Corralation between UNITIL and Montauk Renewables
Considering the 90-day investment horizon UNITIL is expected to generate 0.41 times more return on investment than Montauk Renewables. However, UNITIL is 2.42 times less risky than Montauk Renewables. It trades about 0.04 of its potential returns per unit of risk. Montauk Renewables is currently generating about -0.07 per unit of risk. If you would invest 5,926 in UNITIL on August 28, 2024 and sell it today you would earn a total of 137.00 from holding UNITIL or generate 2.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
UNITIL vs. Montauk Renewables
Performance |
| Timeline |
| UNITIL |
| Montauk Renewables |
UNITIL and Montauk Renewables Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with UNITIL and Montauk Renewables
The main advantage of trading using opposite UNITIL and Montauk Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if UNITIL position performs unexpectedly, Montauk Renewables 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 Montauk Renewables will offset losses from the drop in Montauk Renewables' long position.The idea behind UNITIL and Montauk Renewables 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.| Montauk Renewables vs. Avista | Montauk Renewables vs. Allete Inc | Montauk Renewables vs. Black Hills | Montauk Renewables vs. Companhia Paranaense de |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Money Managers Screen money managers from public funds and ETFs managed around the world | |
| Share Portfolio Track or share privately all of your investments from the convenience of any device | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |