Correlation Between Montauk Renewables and BNP Paribas

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

Diversification Opportunities for Montauk Renewables and BNP Paribas

-0.56
  Correlation Coefficient

Excellent diversification

The 3 months correlation between Montauk and BNPQF is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and BNP Paribas SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BNP Paribas SA 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 BNP Paribas. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BNP Paribas SA has no effect on the direction of Montauk Renewables i.e., Montauk Renewables and BNP Paribas go up and down completely randomly.

Pair Corralation between Montauk Renewables and BNP Paribas

Given the investment horizon of 90 days Montauk Renewables is expected to generate 1.16 times more return on investment than BNP Paribas. However, Montauk Renewables is 1.16 times more volatile than BNP Paribas SA. It trades about 0.03 of its potential returns per unit of risk. BNP Paribas SA is currently generating about 0.01 per unit of risk. If you would invest  1,017  in Montauk Renewables on September 4, 2022 and sell it today you would earn a total of  98.00  from holding Montauk Renewables or generate 9.64% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthVery Weak
Accuracy100.0%
ValuesDaily Returns

Montauk Renewables  vs.  BNP Paribas SA

 Performance (%) 
       Timeline  
Montauk Renewables 
Montauk Performance
0 of 100
Over the last 90 days Montauk Renewables has generated negative risk-adjusted returns adding no value to investors with long positions. Despite weak performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in January 2023. The recent confusion may also be a sign of long-lasting up-swing for the firm traders.

Montauk Price Channel

BNP Paribas SA 
BNPQF Performance
9 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in BNP Paribas SA are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, BNP Paribas exhibited solid returns over the last few months and may actually be approaching a breakup point.

BNPQF Price Channel

Montauk Renewables and BNP Paribas Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Montauk Renewables and BNP Paribas

The main advantage of trading using opposite Montauk Renewables and BNP Paribas positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montauk Renewables position performs unexpectedly, BNP Paribas 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 BNP Paribas will offset losses from the drop in BNP Paribas' long position.
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The idea behind Montauk Renewables and BNP Paribas SA 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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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 Transaction History module to view history of all your transactions and understand their impact on performance.

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