Correlation Between Consol Energy and Federal Home
Can any of the company-specific risk be diversified away by investing in both Consol Energy and Federal Home 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 Federal Home into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consol Energy and Federal Home 530, you can compare the effects of market volatilities on Consol Energy and Federal Home 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 Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and Federal Home.
Diversification Opportunities for Consol Energy and Federal Home
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Consol and Federal is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and Federal Home 530 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home 530 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 Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home 530 has no effect on the direction of Consol Energy i.e., Consol Energy and Federal Home go up and down completely randomly.
Pair Corralation between Consol Energy and Federal Home
Given the investment horizon of 90 days Consol Energy is expected to under-perform the Federal Home. In addition to that, Consol Energy is 1.47 times more volatile than Federal Home 530. It trades about -0.26 of its total potential returns per unit of risk. Federal Home 530 is currently generating about 0.47 per unit of volatility. If you would invest 1,471 in Federal Home 530 on September 19, 2024 and sell it today you would earn a total of 221.00 from holding Federal Home 530 or generate 15.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consol Energy vs. Federal Home 530
Performance |
| Timeline |
| Consol Energy |
| Federal Home 530 |
Consol Energy and Federal Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consol Energy and Federal Home
The main advantage of trading using opposite Consol Energy and Federal Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, Federal Home 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 Federal Home will offset losses from the drop in Federal Home'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 |
| Federal Home vs. Amkor Technology | Federal Home vs. Consol Energy | Federal Home vs. Tenaris SA ADR | Federal Home vs. Patterson UTI Energy |
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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