Correlation Between Consol Energy and Sun Life
Can any of the company-specific risk be diversified away by investing in both Consol Energy and Sun Life 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 Sun Life into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consol Energy and Sun Life Financial, you can compare the effects of market volatilities on Consol Energy and Sun Life 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 Sun Life. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and Sun Life.
Diversification Opportunities for Consol Energy and Sun Life
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Consol and Sun is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and Sun Life Financial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sun Life Financial 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 Sun Life. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sun Life Financial has no effect on the direction of Consol Energy i.e., Consol Energy and Sun Life go up and down completely randomly.
Pair Corralation between Consol Energy and Sun Life
Given the investment horizon of 90 days Consol Energy is expected to generate 3.04 times more return on investment than Sun Life. However, Consol Energy is 3.04 times more volatile than Sun Life Financial. It trades about 0.27 of its potential returns per unit of risk. Sun Life Financial is currently generating about 0.52 per unit of risk. If you would invest 11,070 in Consol Energy on September 1, 2024 and sell it today you would earn a total of 2,000 from holding Consol Energy or generate 18.07% 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. Sun Life Financial
Performance |
| Timeline |
| Consol Energy |
| Sun Life Financial |
Consol Energy and Sun Life Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Consol Energy and Sun Life
The main advantage of trading using opposite Consol Energy and Sun Life positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, Sun Life 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 Sun Life will offset losses from the drop in Sun Life'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 |
| Sun Life vs. Hartford Financial Services | Sun Life vs. Goosehead Insurance | Sun Life vs. International General Insurance | Sun Life vs. Enstar Group Limited |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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