Correlation Between Montauk Renewables and Zedge

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

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

Diversification Opportunities for Montauk Renewables and Zedge

0.66

Correlation Coefficient

Montauk Renewables  Zedge

Poor diversification

The 3 months correlation between Montauk and Zedge is 0.66. Overlapping area represents the amount of risk that can be diversified away by holding Montauk Renewables and Zedge Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zedge Inc 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 Zedge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zedge Inc has no effect on the direction of Montauk Renewables i.e., Montauk Renewables and Zedge go up and down completely randomly.

Pair Corralation between Montauk Renewables and Zedge

Given the investment horizon of 90 days Montauk Renewables is expected to under-perform the Zedge. But the stock apears to be less risky and, when comparing its historical volatility, Montauk Renewables is 2.24 times less risky than Zedge. The stock trades about -0.28 of its potential returns per unit of risk. The Zedge Inc is currently generating about -0.03 of returns per unit of risk over similar time horizon. If you would invest  255.00  in Zedge Inc on September 22, 2024 and sell it today you would lose (19.00) from holding Zedge Inc or give up 7.45% of portfolio value over 90 days.

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

Montauk Renewables  vs.  Zedge Inc

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.

Zedge Inc

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Zedge Inc has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Montauk Renewables and Zedge

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

The idea behind Montauk Renewables and Zedge Inc 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.

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 the Share Portfolio module to track or share privately all of your investments from the convenience of any device.