Correlation Between Consol Energy and EMCOR
Can any of the company-specific risk be diversified away by investing in both Consol Energy and EMCOR 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 EMCOR into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consol Energy and EMCOR Group, you can compare the effects of market volatilities on Consol Energy and EMCOR 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 EMCOR. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and EMCOR.
Diversification Opportunities for Consol Energy and EMCOR
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Consol and EMCOR is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and EMCOR Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on EMCOR Group 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 EMCOR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of EMCOR Group has no effect on the direction of Consol Energy i.e., Consol Energy and EMCOR go up and down completely randomly.
Pair Corralation between Consol Energy and EMCOR
Given the investment horizon of 90 days Consol Energy is expected to generate 1.55 times less return on investment than EMCOR. In addition to that, Consol Energy is 1.51 times more volatile than EMCOR Group. It trades about 0.06 of its total potential returns per unit of risk. EMCOR Group is currently generating about 0.14 per unit of volatility. If you would invest 14,811 in EMCOR Group on August 26, 2024 and sell it today you would earn a total of 35,681 from holding EMCOR Group or generate 240.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consol Energy vs. EMCOR Group
Performance |
| Timeline |
| Consol Energy |
| EMCOR Group |
Consol Energy and EMCOR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consol Energy and EMCOR
The main advantage of trading using opposite Consol Energy and EMCOR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, EMCOR 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 EMCOR will offset losses from the drop in EMCOR'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 |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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