Correlation Between Montauk Renewables and OPTIMUM FIXED

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

Diversification Opportunities for Montauk Renewables and OPTIMUM FIXED

0.15
  Correlation Coefficient

Average diversification

The 3 months correlation between Montauk and OPTIMUM is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and OPTIMUM FIXED INCOME in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on OPTIMUM FIXED INCOME 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 OPTIMUM FIXED. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of OPTIMUM FIXED INCOME has no effect on the direction of Montauk Renewables i.e., Montauk Renewables and OPTIMUM FIXED go up and down completely randomly.

Pair Corralation between Montauk Renewables and OPTIMUM FIXED

Given the investment horizon of 90 days Montauk Renewables is expected to under-perform the OPTIMUM FIXED. In addition to that, Montauk Renewables is 7.43 times more volatile than OPTIMUM FIXED INCOME. It trades about -0.3 of its total potential returns per unit of risk. OPTIMUM FIXED INCOME is currently generating about 0.56 per unit of volatility. If you would invest  793.00  in OPTIMUM FIXED INCOME on September 6, 2022 and sell it today you would earn a total of  47.00  from holding OPTIMUM FIXED INCOME or generate 5.93% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Montauk Renewables  vs.  OPTIMUM FIXED INCOME

 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

OPTIMUM FIXED INCOME 
OPTIMUM Performance
0 of 100
Over the last 90 days OPTIMUM FIXED INCOME has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, OPTIMUM FIXED is not utilizing all of its potentials. The newest stock price disturbance, may contribute to short-term losses for the investors.

OPTIMUM Price Channel

Montauk Renewables and OPTIMUM FIXED Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Montauk Renewables and OPTIMUM FIXED

The main advantage of trading using opposite Montauk Renewables and OPTIMUM FIXED positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Montauk Renewables position performs unexpectedly, OPTIMUM FIXED 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 OPTIMUM FIXED will offset losses from the drop in OPTIMUM FIXED's long position.
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The idea behind Montauk Renewables and OPTIMUM FIXED INCOME 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.

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