Correlation Between Montauk Renewables and Dine Brands

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

By analyzing existing cross correlation between Montauk Renewables and Dine Brands Global, you can compare the effects of market volatilities on Montauk Renewables and Dine Brands 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 Dine Brands. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montauk Renewables and Dine Brands.

Diversification Opportunities for Montauk Renewables and Dine Brands

-0.05

Correlation Coefficient

Montauk Renewables  Dine Brands

Good diversification

The 3 months correlation between Montauk and Dine is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and Dine Brands Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dine Brands Global 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 Dine Brands. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dine Brands Global has no effect on the direction of Montauk Renewables i.e., Montauk Renewables and Dine Brands go up and down completely randomly.

Pair Corralation between Montauk Renewables and Dine Brands

Given the investment horizon of 90 days Montauk Renewables is expected to under-perform the Dine Brands. In addition to that, Montauk Renewables is 1.69 times more volatile than Dine Brands Global. It trades about -0.03 of its total potential returns per unit of risk. Dine Brands Global is currently generating about -0.03 per unit of volatility. If you would invest  6,260  in Dine Brands Global on September 3, 2024 and sell it today you would lose (2,668) from holding Dine Brands Global or give up 42.62% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Montauk Renewables  vs.  Dine Brands Global

Montauk Renewables

Risk-Adjusted Performance

2 of 100

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 January 2025.

Dine Brands Global

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Dine Brands Global are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating forward indicators, Dine Brands displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Montauk Renewables and Dine Brands

The main advantage of trading using opposite Montauk Renewables and Dine Brands positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montauk Renewables position performs unexpectedly, Dine Brands 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 Dine Brands will offset losses from the drop in Dine Brands' long position.

The idea behind Montauk Renewables and Dine Brands Global 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.