Correlation Between Consol Energy and Knife River
Can any of the company-specific risk be diversified away by investing in both Consol Energy and Knife River 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 Knife River into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consol Energy and Knife River, you can compare the effects of market volatilities on Consol Energy and Knife River 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 Knife River. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and Knife River.
Diversification Opportunities for Consol Energy and Knife River
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Consol and Knife is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and Knife River in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Knife River 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 Knife River. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Knife River has no effect on the direction of Consol Energy i.e., Consol Energy and Knife River go up and down completely randomly.
Pair Corralation between Consol Energy and Knife River
Given the investment horizon of 90 days Consol Energy is expected to generate 1.63 times less return on investment than Knife River. In addition to that, Consol Energy is 1.23 times more volatile than Knife River. It trades about 0.05 of its total potential returns per unit of risk. Knife River is currently generating about 0.11 per unit of volatility. If you would invest 6,254 in Knife River on September 4, 2024 and sell it today you would earn a total of 4,098 from holding Knife River or generate 65.53% 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. Knife River
Performance |
| Timeline |
| Consol Energy |
| Knife River |
Consol Energy and Knife River Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consol Energy and Knife River
The main advantage of trading using opposite Consol Energy and Knife River positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, Knife River 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 Knife River will offset losses from the drop in Knife River'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 |
| Knife River vs. Chemours Co | Knife River vs. Consol Energy | Knife River vs. Teleflex Incorporated | Knife River vs. Merit Medical Systems |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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