Correlation Between Consol Energy and JD Sports
Can any of the company-specific risk be diversified away by investing in both Consol Energy and JD Sports 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 JD Sports into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consol Energy and JD Sports Fashion, you can compare the effects of market volatilities on Consol Energy and JD Sports 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 JD Sports. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and JD Sports.
Diversification Opportunities for Consol Energy and JD Sports
-0.83 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Consol and JDSPY is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and JD Sports Fashion in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on JD Sports Fashion 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 JD Sports. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of JD Sports Fashion has no effect on the direction of Consol Energy i.e., Consol Energy and JD Sports go up and down completely randomly.
Pair Corralation between Consol Energy and JD Sports
Given the investment horizon of 90 days Consol Energy is expected to generate 0.52 times more return on investment than JD Sports. However, Consol Energy is 1.94 times less risky than JD Sports. It trades about 0.26 of its potential returns per unit of risk. JD Sports Fashion is currently generating about -0.13 per unit of risk. If you would invest 10,785 in Consol Energy on September 5, 2024 and sell it today you would earn a total of 1,971 from holding Consol Energy or generate 18.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consol Energy vs. JD Sports Fashion
Performance |
| Timeline |
| Consol Energy |
| JD Sports Fashion |
Consol Energy and JD Sports Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consol Energy and JD Sports
The main advantage of trading using opposite Consol Energy and JD Sports positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, JD Sports 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 JD Sports will offset losses from the drop in JD Sports' long position.| Consol Energy vs. Alliance Resource Partners | Consol Energy vs. Natural Resource Partners | Consol Energy vs. Hallador Energy | Consol Energy vs. NACCO Industries |
| JD Sports vs. Burlington Stores | JD Sports vs. Childrens Place | JD Sports vs. Buckle Inc | JD Sports vs. Shoe Carnival |
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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.
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