Correlation Between Alpha Metallurgical and Colonial Coal
Can any of the company-specific risk be diversified away by investing in both Alpha Metallurgical and Colonial Coal 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 Alpha Metallurgical and Colonial Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Alpha Metallurgical Resources and Colonial Coal International, you can compare the effects of market volatilities on Alpha Metallurgical and Colonial Coal 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 Alpha Metallurgical with a short position of Colonial Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Alpha Metallurgical and Colonial Coal.
Diversification Opportunities for Alpha Metallurgical and Colonial Coal
0.5 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Alpha and Colonial is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Alpha Metallurgical Resources and Colonial Coal International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colonial Coal Intern and Alpha Metallurgical 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 Alpha Metallurgical Resources are associated (or correlated) with Colonial Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colonial Coal Intern has no effect on the direction of Alpha Metallurgical i.e., Alpha Metallurgical and Colonial Coal go up and down completely randomly.
Pair Corralation between Alpha Metallurgical and Colonial Coal
Considering the 90-day investment horizon Alpha Metallurgical Resources is expected to under-perform the Colonial Coal. In addition to that, Alpha Metallurgical is 1.22 times more volatile than Colonial Coal International. It trades about -0.07 of its total potential returns per unit of risk. Colonial Coal International is currently generating about 0.01 per unit of volatility. If you would invest 130.00 in Colonial Coal International on October 23, 2024 and sell it today you would earn a total of 0.00 from holding Colonial Coal International or generate 0.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 94.74% |
| Values | Daily Returns |
Alpha Metallurgical Resources vs. Colonial Coal International
Performance |
| Timeline |
| Alpha Metallurgical |
| Colonial Coal Intern |
Alpha Metallurgical and Colonial Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Alpha Metallurgical and Colonial Coal
The main advantage of trading using opposite Alpha Metallurgical and Colonial Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alpha Metallurgical position performs unexpectedly, Colonial Coal 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 Colonial Coal will offset losses from the drop in Colonial Coal's long position.| Alpha Metallurgical vs. Warrior Met Coal | Alpha Metallurgical vs. Ramaco Resources | Alpha Metallurgical vs. SunCoke Energy | Alpha Metallurgical vs. American Resources Corp |
| Colonial Coal vs. Coronado Global Resources | Colonial Coal vs. Alpha Metallurgical Resources | Colonial Coal vs. Warrior Met Coal | Colonial Coal vs. Ramaco Resources |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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