Correlation Between BOS Better and Montauk Renewables

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

By analyzing existing cross correlation between BOS Better Online and Montauk Renewables, you can compare the effects of market volatilities on BOS Better and Montauk Renewables 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 BOS Better with a short position of Montauk Renewables. Check out your portfolio center. Please also check ongoing floating volatility patterns of BOS Better and Montauk Renewables.

Diversification Opportunities for BOS Better and Montauk Renewables

-0.67

Correlation Coefficient

BOS Better  Montauk Renewables

Excellent diversification

The 3 months correlation between BOS and Montauk is -0.67. Overlapping area represents the amount of risk that can be diversified away by holding BOS Better Online and Montauk Renewables in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Montauk Renewables and BOS Better 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 BOS Better Online are associated (or correlated) with Montauk Renewables. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Montauk Renewables has no effect on the direction of BOS Better i.e., BOS Better and Montauk Renewables go up and down completely randomly.

Pair Corralation between BOS Better and Montauk Renewables

Given the investment horizon of 90 days BOS Better is expected to generate 1.02 times less return on investment than Montauk Renewables. But when comparing it to its historical volatility, BOS Better Online is 1.22 times less risky than Montauk Renewables. It trades about 0.18 of its potential returns per unit of risk. Montauk Renewables is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  378.00  in Montauk Renewables on October 23, 2024 and sell it today you would earn a total of  49.00  from holding Montauk Renewables or generate 12.96% return on investment over 90 days.

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

BOS Better Online  vs.  Montauk Renewables

BOS Better Online

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in BOS Better Online are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather weak basic indicators, BOS Better exhibited solid returns over the last few months and may actually be approaching a breakup point.

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 weak performance in the last few months, the Stock's basic indicators remain quite persistent which may send shares a bit higher in February 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

Pair Trading with BOS Better and Montauk Renewables

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

The idea behind BOS Better Online and Montauk Renewables 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.