Correlation Between Landcadia Holdings and Montauk Renewables

Can any of the company-specific risk be diversified away by investing in both Landcadia Holdings 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 Landcadia Holdings and Montauk Renewables into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Landcadia Holdings II and Montauk Renewables, you can compare the effects of market volatilities on Landcadia Holdings 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 Landcadia Holdings with a short position of Montauk Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of Landcadia Holdings and Montauk Renewables.

Diversification Opportunities for Landcadia Holdings and Montauk Renewables

-0.63

Correlation Coefficient

Landcadia Holdings  Montauk Renewables

Excellent diversification

The 3 months correlation between Landcadia and Montauk is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Landcadia Holdings II and Montauk Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montauk Renewables and Landcadia Holdings 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 Landcadia Holdings II 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 Landcadia Holdings i.e., Landcadia Holdings and Montauk Renewables go up and down completely randomly.

Pair Corralation between Landcadia Holdings and Montauk Renewables

If you would invest  1,020  in Landcadia Holdings II on September 17, 2024 and sell it today you would earn a total of  0.00  from holding Landcadia Holdings II or generate 0.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	1.54%
Values	Daily Returns

Landcadia Holdings II  vs.  Montauk Renewables

Landcadia Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Landcadia Holdings II has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable technical indicators, Landcadia Holdings is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Montauk Renewables

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Montauk Renewables has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Stock's basic indicators remain persistent and the latest mess on Wall Street may also be a sign of long-standing gains for the company institutional investors.

Pair Trading with Landcadia Holdings and Montauk Renewables

The main advantage of trading using opposite Landcadia Holdings and Montauk Renewables positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Landcadia Holdings 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 Landcadia Holdings II 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.

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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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.