Correlation Between Consol Energy and Life Time
Can any of the company-specific risk be diversified away by investing in both Consol Energy and Life Time 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 Life Time into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consol Energy and Life Time Group, you can compare the effects of market volatilities on Consol Energy and Life Time 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 Life Time. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and Life Time.
Diversification Opportunities for Consol Energy and Life Time
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Consol and Life is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and Life Time Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Life Time Group 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 Life Time. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Life Time Group has no effect on the direction of Consol Energy i.e., Consol Energy and Life Time go up and down completely randomly.
Pair Corralation between Consol Energy and Life Time
Given the investment horizon of 90 days Consol Energy is expected to generate 1.02 times less return on investment than Life Time. But when comparing it to its historical volatility, Consol Energy is 1.01 times less risky than Life Time. It trades about 0.06 of its potential returns per unit of risk. Life Time Group is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest 1,280 in Life Time Group on September 5, 2024 and sell it today you would earn a total of 1,132 from holding Life Time Group or generate 88.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consol Energy vs. Life Time Group
Performance |
| Timeline |
| Consol Energy |
| Life Time Group |
Consol Energy and Life Time Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consol Energy and Life Time
The main advantage of trading using opposite Consol Energy and Life Time positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, Life Time 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 Life Time will offset losses from the drop in Life Time'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 |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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