Correlation Between Montauk Renewables and Boston Beer

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Can any of the company-specific risk be diversified away by investing in both Montauk Renewables and Boston Beer 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 Boston Beer into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Montauk Renewables and Boston Beer, you can compare the effects of market volatilities on Montauk Renewables and Boston Beer 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 Boston Beer. Check out your portfolio center. Please also check ongoing floating volatility patterns of Montauk Renewables and Boston Beer.

Diversification Opportunities for Montauk Renewables and Boston Beer

-0.49
  Correlation Coefficient

Very good diversification

The 3 months correlation between Montauk and Boston is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and Boston Beer in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Beer 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 Boston Beer. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Beer has no effect on the direction of Montauk Renewables i.e., Montauk Renewables and Boston Beer go up and down completely randomly.

Pair Corralation between Montauk Renewables and Boston Beer

Given the investment horizon of 90 days Montauk Renewables is expected to under-perform the Boston Beer. In addition to that, Montauk Renewables is 3.19 times more volatile than Boston Beer. It trades about -0.02 of its total potential returns per unit of risk. Boston Beer is currently generating about -0.04 per unit of volatility. If you would invest  31,069  in Boston Beer on September 17, 2024 and sell it today you would lose (319.00) from holding Boston Beer or give up 1.03% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Montauk Renewables  vs.  Boston Beer

 Performance 
       Timeline  
Montauk Renewables 

Risk-Adjusted Performance

0 of 100

 
Weak
 
Strong
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.
Boston Beer 

Risk-Adjusted Performance

8 of 100

 
Weak
 
Strong
Good
Compared to the overall equity markets, risk-adjusted returns on investments in Boston Beer are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of very weak basic indicators, Boston Beer may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Montauk Renewables and Boston Beer Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Montauk Renewables and Boston Beer

The main advantage of trading using opposite Montauk Renewables and Boston Beer positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montauk Renewables position performs unexpectedly, Boston Beer 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 Boston Beer will offset losses from the drop in Boston Beer's long position.
The idea behind Montauk Renewables and Boston Beer 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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.

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