Correlation Between Montauk Renewables and Green Shift

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

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

Diversification Opportunities for Montauk Renewables and Green Shift

0.29

Correlation Coefficient

Montauk Renewables  Green Shift

Modest diversification

The 3 months correlation between Montauk and Green is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and Green Shift Commodities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Green Shift Commodities 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 Green Shift. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Green Shift Commodities has no effect on the direction of Montauk Renewables i.e., Montauk Renewables and Green Shift go up and down completely randomly.

Pair Corralation between Montauk Renewables and Green Shift

Given the investment horizon of 90 days Montauk Renewables is expected to generate 0.5 times more return on investment than Green Shift. However, Montauk Renewables is 1.98 times less risky than Green Shift. It trades about -0.01 of its potential returns per unit of risk. Green Shift Commodities is currently generating about -0.02 per unit of risk. If you would invest  438.00  in Montauk Renewables on September 12, 2024 and sell it today you would lose (33.00) from holding Montauk Renewables or give up 7.53% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.44%
Values	Daily Returns

Montauk Renewables  vs.  Green Shift Commodities

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 quite persistent basic indicators, Montauk Renewables is not utilizing all of its potentials. The current stock price mess, may contribute to short-term losses for the institutional investors.

Green Shift Commodities

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Green Shift Commodities has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest fragile performance, the Stock's primary indicators remain stable and the current disturbance on Wall Street may also be a sign of long-run gains for the company stockholders.

Pair Trading with Montauk Renewables and Green Shift

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

The idea behind Montauk Renewables and Green Shift Commodities 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.

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.