Correlation Between Montauk Renewables and U Haul

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

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

Diversification Opportunities for Montauk Renewables and U Haul

0.51

Correlation Coefficient

Montauk Renewables  U Haul

Very weak diversification

The 3 months correlation between Montauk and UHAL is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and U Haul Holding in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on U Haul Holding 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 U Haul. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of U Haul Holding has no effect on the direction of Montauk Renewables i.e., Montauk Renewables and U Haul go up and down completely randomly.

Pair Corralation between Montauk Renewables and U Haul

Given the investment horizon of 90 days Montauk Renewables is expected to under-perform the U Haul. In addition to that, Montauk Renewables is 1.35 times more volatile than U Haul Holding. It trades about -0.28 of its total potential returns per unit of risk. U Haul Holding is currently generating about -0.03 per unit of volatility. If you would invest  7,219  in U Haul Holding on September 24, 2024 and sell it today you would lose (131.00) from holding U Haul Holding or give up 1.81% of portfolio value over 90 days.

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

Montauk Renewables  vs.  U Haul Holding

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 January 2025. The latest mess may also be a sign of long-standing up-swing for the company institutional investors.

U Haul Holding

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days U Haul Holding has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest conflicting 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.

Pair Trading with Montauk Renewables and U Haul

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

The idea behind Montauk Renewables and U Haul Holding 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.