Correlation Between Consol Energy and Dixons Carphone
Can any of the company-specific risk be diversified away by investing in both Consol Energy and Dixons Carphone 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 Dixons Carphone into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consol Energy and Dixons Carphone plc, you can compare the effects of market volatilities on Consol Energy and Dixons Carphone 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 Dixons Carphone. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and Dixons Carphone.
Diversification Opportunities for Consol Energy and Dixons Carphone
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Consol and Dixons is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and Dixons Carphone plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dixons Carphone plc 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 Dixons Carphone. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dixons Carphone plc has no effect on the direction of Consol Energy i.e., Consol Energy and Dixons Carphone go up and down completely randomly.
Pair Corralation between Consol Energy and Dixons Carphone
Given the investment horizon of 90 days Consol Energy is expected to generate 0.8 times more return on investment than Dixons Carphone. However, Consol Energy is 1.26 times less risky than Dixons Carphone. It trades about 0.06 of its potential returns per unit of risk. Dixons Carphone plc is currently generating about 0.02 per unit of risk. If you would invest 6,897 in Consol Energy on August 27, 2024 and sell it today you would earn a total of 6,276 from holding Consol Energy or generate 91.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consol Energy vs. Dixons Carphone plc
Performance |
| Timeline |
| Consol Energy |
| Dixons Carphone plc |
Consol Energy and Dixons Carphone Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consol Energy and Dixons Carphone
The main advantage of trading using opposite Consol Energy and Dixons Carphone positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, Dixons Carphone 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 Dixons Carphone will offset losses from the drop in Dixons Carphone's 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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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