Correlation Between Consol Energy and Companhia Paranaense
Can any of the company-specific risk be diversified away by investing in both Consol Energy and Companhia Paranaense 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 Companhia Paranaense into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consol Energy and Companhia Paranaense de, you can compare the effects of market volatilities on Consol Energy and Companhia Paranaense 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 Companhia Paranaense. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and Companhia Paranaense.
Diversification Opportunities for Consol Energy and Companhia Paranaense
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Consol and Companhia is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and Companhia Paranaense de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Companhia Paranaense 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 Companhia Paranaense. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Companhia Paranaense has no effect on the direction of Consol Energy i.e., Consol Energy and Companhia Paranaense go up and down completely randomly.
Pair Corralation between Consol Energy and Companhia Paranaense
Given the investment horizon of 90 days Consol Energy is expected to under-perform the Companhia Paranaense. In addition to that, Consol Energy is 1.08 times more volatile than Companhia Paranaense de. It trades about -0.05 of its total potential returns per unit of risk. Companhia Paranaense de is currently generating about -0.01 per unit of volatility. If you would invest 588.00 in Companhia Paranaense de on October 26, 2024 and sell it today you would lose (19.00) from holding Companhia Paranaense de or give up 3.23% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 91.53% |
| Values | Daily Returns |
Consol Energy vs. Companhia Paranaense de
Performance |
| Timeline |
| Consol Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| Companhia Paranaense |
Consol Energy and Companhia Paranaense Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consol Energy and Companhia Paranaense
The main advantage of trading using opposite Consol Energy and Companhia Paranaense positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, Companhia Paranaense 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 Companhia Paranaense will offset losses from the drop in Companhia Paranaense'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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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