Correlation Between Consol Energy and New HopeLtd
Can any of the company-specific risk be diversified away by investing in both Consol Energy and New HopeLtd 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 New HopeLtd into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consol Energy and New Hope, you can compare the effects of market volatilities on Consol Energy and New HopeLtd 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 New HopeLtd. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and New HopeLtd.
Diversification Opportunities for Consol Energy and New HopeLtd
0.43 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Consol and New is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and New Hope in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on New HopeLtd 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 New HopeLtd. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of New HopeLtd has no effect on the direction of Consol Energy i.e., Consol Energy and New HopeLtd go up and down completely randomly.
Pair Corralation between Consol Energy and New HopeLtd
Given the investment horizon of 90 days Consol Energy is expected to generate 0.36 times more return on investment than New HopeLtd. However, Consol Energy is 2.77 times less risky than New HopeLtd. It trades about 0.08 of its potential returns per unit of risk. New Hope is currently generating about 0.03 per unit of risk. If you would invest 10,523 in Consol Energy on September 1, 2024 and sell it today you would earn a total of 2,547 from holding Consol Energy or generate 24.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Consol Energy vs. New Hope
Performance |
| Timeline |
| Consol Energy |
| New HopeLtd |
Consol Energy and New HopeLtd Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consol Energy and New HopeLtd
The main advantage of trading using opposite Consol Energy and New HopeLtd positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, New HopeLtd 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 New HopeLtd will offset losses from the drop in New HopeLtd'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 |
| New HopeLtd vs. Whitehaven Coal Limited | New HopeLtd vs. Adaro Energy Tbk | New HopeLtd vs. Thungela Resources Limited | New HopeLtd vs. Yanzhou Coal Mining |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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