Correlation Between Consol Energy and GCM Resources
Can any of the company-specific risk be diversified away by investing in both Consol Energy and GCM Resources 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 GCM Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consol Energy and GCM Resources Plc, you can compare the effects of market volatilities on Consol Energy and GCM Resources 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 GCM Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and GCM Resources.
Diversification Opportunities for Consol Energy and GCM Resources
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Consol and GCM is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and GCM Resources Plc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GCM Resources 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 GCM Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GCM Resources Plc has no effect on the direction of Consol Energy i.e., Consol Energy and GCM Resources go up and down completely randomly.
Pair Corralation between Consol Energy and GCM Resources
Given the investment horizon of 90 days Consol Energy is expected to generate 3.28 times less return on investment than GCM Resources. But when comparing it to its historical volatility, Consol Energy is 5.04 times less risky than GCM Resources. It trades about 0.06 of its potential returns per unit of risk. GCM Resources Plc is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 8.00 in GCM Resources Plc on September 3, 2024 and sell it today you would earn a total of 4.00 from holding GCM Resources Plc or generate 50.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consol Energy vs. GCM Resources Plc
Performance |
| Timeline |
| Consol Energy |
| GCM Resources Plc |
Consol Energy and GCM Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consol Energy and GCM Resources
The main advantage of trading using opposite Consol Energy and GCM Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, GCM Resources 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 GCM Resources will offset losses from the drop in GCM Resources' long position.| Consol Energy vs. Alliance Resource Partners | Consol Energy vs. Natural Resource Partners | Consol Energy vs. Hallador Energy | Consol Energy vs. NACCO Industries |
| GCM Resources vs. NACCO Industries | GCM Resources vs. Alliance Resource Partners | GCM Resources vs. Hallador Energy | GCM Resources vs. Consol 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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