Correlation Between Consol Energy and Insteel Industries
Can any of the company-specific risk be diversified away by investing in both Consol Energy and Insteel Industries 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 Insteel Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consol Energy and Insteel Industries, you can compare the effects of market volatilities on Consol Energy and Insteel Industries 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 Insteel Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and Insteel Industries.
Diversification Opportunities for Consol Energy and Insteel Industries
0.67 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Consol and Insteel is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and Insteel Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Insteel Industries 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 Insteel Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Insteel Industries has no effect on the direction of Consol Energy i.e., Consol Energy and Insteel Industries go up and down completely randomly.
Pair Corralation between Consol Energy and Insteel Industries
Given the investment horizon of 90 days Consol Energy is expected to generate 1.3 times more return on investment than Insteel Industries. However, Consol Energy is 1.3 times more volatile than Insteel Industries. It trades about 0.05 of its potential returns per unit of risk. Insteel Industries is currently generating about 0.0 per unit of risk. If you would invest 5,922 in Consol Energy on October 12, 2024 and sell it today you would earn a total of 4,137 from holding Consol Energy or generate 69.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consol Energy vs. Insteel Industries
Performance |
| Timeline |
| Consol Energy |
| Insteel Industries |
Consol Energy and Insteel Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consol Energy and Insteel Industries
The main advantage of trading using opposite Consol Energy and Insteel Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, Insteel Industries 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 Insteel Industries will offset losses from the drop in Insteel Industries' long position.| Consol Energy vs. Alliance Resource Partners | Consol Energy vs. Natural Resource Partners | Consol Energy vs. Hallador Energy | Consol Energy vs. NACCO Industries |
| Insteel Industries vs. Mayville Engineering Co | Insteel Industries vs. Gulf Island Fabrication | Insteel Industries vs. ESAB Corp | Insteel Industries vs. Northwest Pipe |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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