Correlation Between Consol Energy and Croghan Bancshares
Can any of the company-specific risk be diversified away by investing in both Consol Energy and Croghan Bancshares 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 Consol Energy and Croghan Bancshares into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consol Energy and Croghan Bancshares, you can compare the effects of market volatilities on Consol Energy and Croghan Bancshares 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 Consol Energy with a short position of Croghan Bancshares. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and Croghan Bancshares.
Diversification Opportunities for Consol Energy and Croghan Bancshares
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Consol and Croghan is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and Croghan Bancshares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Croghan Bancshares and Consol Energy 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 Consol Energy are associated (or correlated) with Croghan Bancshares. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Croghan Bancshares has no effect on the direction of Consol Energy i.e., Consol Energy and Croghan Bancshares go up and down completely randomly.
Pair Corralation between Consol Energy and Croghan Bancshares
Given the investment horizon of 90 days Consol Energy is expected to generate 0.82 times more return on investment than Croghan Bancshares. However, Consol Energy is 1.21 times less risky than Croghan Bancshares. It trades about 0.05 of its potential returns per unit of risk. Croghan Bancshares is currently generating about 0.01 per unit of risk. If you would invest 6,798 in Consol Energy on September 12, 2024 and sell it today you would earn a total of 4,790 from holding Consol Energy or generate 70.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 84.24% |
| Values | Daily Returns |
Consol Energy vs. Croghan Bancshares
Performance |
| Timeline |
| Consol Energy |
| Croghan Bancshares |
Consol Energy and Croghan Bancshares Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consol Energy and Croghan Bancshares
The main advantage of trading using opposite Consol Energy and Croghan Bancshares positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, Croghan Bancshares 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 Croghan Bancshares will offset losses from the drop in Croghan Bancshares' long position.| Consol Energy vs. Alliance Resource Partners | Consol Energy vs. Natural Resource Partners | Consol Energy vs. Hallador Energy | Consol Energy vs. NACCO Industries |
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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 the Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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