Correlation Between Consol Energy and New Horizon
Can any of the company-specific risk be diversified away by investing in both Consol Energy and New Horizon 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 New Horizon into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consol Energy and New Horizon Aircraft, you can compare the effects of market volatilities on Consol Energy and New Horizon 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 New Horizon. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and New Horizon.
Diversification Opportunities for Consol Energy and New Horizon
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Consol and New is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and New Horizon Aircraft in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New Horizon Aircraft 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 New Horizon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New Horizon Aircraft has no effect on the direction of Consol Energy i.e., Consol Energy and New Horizon go up and down completely randomly.
Pair Corralation between Consol Energy and New Horizon
Given the investment horizon of 90 days Consol Energy is expected to generate 0.3 times more return on investment than New Horizon. However, Consol Energy is 3.3 times less risky than New Horizon. It trades about 0.05 of its potential returns per unit of risk. New Horizon Aircraft is currently generating about -0.02 per unit of risk. If you would invest 6,865 in Consol Energy on September 15, 2024 and sell it today you would earn a total of 4,783 from holding Consol Energy or generate 69.67% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 86.67% |
| Values | Daily Returns |
Consol Energy vs. New Horizon Aircraft
Performance |
| Timeline |
| Consol Energy |
| New Horizon Aircraft |
Consol Energy and New Horizon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consol Energy and New Horizon
The main advantage of trading using opposite Consol Energy and New Horizon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, New Horizon 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 New Horizon will offset losses from the drop in New Horizon'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 |
| New Horizon vs. Lincoln Electric Holdings | New Horizon vs. Estee Lauder Companies | New Horizon vs. Toro Co | New Horizon vs. Eastern Co |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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