Correlation Between Consol Energy and NACCO Industries
Can any of the company-specific risk be diversified away by investing in both Consol Energy and NACCO 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 NACCO 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 NACCO Industries, you can compare the effects of market volatilities on Consol Energy and NACCO 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 NACCO Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and NACCO Industries.
Diversification Opportunities for Consol Energy and NACCO Industries
-0.03 | Correlation Coefficient |
Good diversification
The 3 months correlation between Consol and NACCO is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and NACCO Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NACCO 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 NACCO Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NACCO Industries has no effect on the direction of Consol Energy i.e., Consol Energy and NACCO Industries go up and down completely randomly.
Pair Corralation between Consol Energy and NACCO Industries
Given the investment horizon of 90 days Consol Energy is expected to under-perform the NACCO Industries. In addition to that, Consol Energy is 1.79 times more volatile than NACCO Industries. It trades about -0.43 of its total potential returns per unit of risk. NACCO Industries is currently generating about 0.31 per unit of volatility. If you would invest 3,000 in NACCO Industries on November 2, 2024 and sell it today you would earn a total of 203.00 from holding NACCO Industries or generate 6.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 47.37% |
| Values | Daily Returns |
Consol Energy vs. NACCO Industries
Performance |
| Timeline |
| Consol Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Very Weak
| NACCO Industries |
Consol Energy and NACCO Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consol Energy and NACCO Industries
The main advantage of trading using opposite Consol Energy and NACCO Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, NACCO 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 NACCO Industries will offset losses from the drop in NACCO 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 |
| NACCO Industries vs. Alliance Resource Partners | NACCO Industries vs. Hallador Energy | NACCO Industries vs. Indo Tambangraya Megah | NACCO Industries vs. Natural Resource Partners |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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