Correlation Between Consol Energy and Funko

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Can any of the company-specific risk be diversified away by investing in both Consol Energy and Funko 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 Funko into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consol Energy and Funko Inc, you can compare the effects of market volatilities on Consol Energy and Funko 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 Funko. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and Funko.

Diversification Opportunities for Consol Energy and Funko

-0.04
  Correlation Coefficient

Good diversification

The 3 months correlation between Consol and Funko is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and Funko Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Funko Inc 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 Funko. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Funko Inc has no effect on the direction of Consol Energy i.e., Consol Energy and Funko go up and down completely randomly.

Pair Corralation between Consol Energy and Funko

Given the investment horizon of 90 days Consol Energy is expected to generate 0.75 times more return on investment than Funko. However, Consol Energy is 1.34 times less risky than Funko. It trades about 0.06 of its potential returns per unit of risk. Funko Inc is currently generating about 0.03 per unit of risk. If you would invest  6,839  in Consol Energy on September 5, 2024 and sell it today you would earn a total of  5,917  from holding Consol Energy or generate 86.52% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Consol Energy  vs.  Funko Inc

 Performance 
       Timeline  
Consol Energy 

Risk-Adjusted Performance

17 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Consol Energy are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Consol Energy showed solid returns over the last few months and may actually be approaching a breakup point.
Funko Inc 

Risk-Adjusted Performance

9 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Funko Inc are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain forward-looking signals, Funko displayed solid returns over the last few months and may actually be approaching a breakup point.

Consol Energy and Funko Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Consol Energy and Funko

The main advantage of trading using opposite Consol Energy and Funko positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, Funko 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 Funko will offset losses from the drop in Funko's long position.
The idea behind Consol Energy and Funko Inc pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.

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