Correlation Between DAIRY FARM and CONSOL Energy
Can any of the company-specific risk be diversified away by investing in both DAIRY FARM and CONSOL Energy 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 DAIRY FARM and CONSOL Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between DAIRY FARM INTL and CONSOL Energy, you can compare the effects of market volatilities on DAIRY FARM and CONSOL Energy 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 DAIRY FARM with a short position of CONSOL Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of DAIRY FARM and CONSOL Energy.
Diversification Opportunities for DAIRY FARM and CONSOL Energy
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between DAIRY and CONSOL is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding DAIRY FARM INTL and CONSOL Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOL Energy and DAIRY FARM 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 DAIRY FARM INTL are associated (or correlated) with CONSOL Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOL Energy has no effect on the direction of DAIRY FARM i.e., DAIRY FARM and CONSOL Energy go up and down completely randomly.
Pair Corralation between DAIRY FARM and CONSOL Energy
Assuming the 90 days trading horizon DAIRY FARM is expected to generate 2.7 times less return on investment than CONSOL Energy. But when comparing it to its historical volatility, DAIRY FARM INTL is 2.24 times less risky than CONSOL Energy. It trades about 0.26 of its potential returns per unit of risk. CONSOL Energy is currently generating about 0.32 of returns per unit of risk over similar time horizon. If you would invest 10,138 in CONSOL Energy on September 2, 2024 and sell it today you would earn a total of 2,377 from holding CONSOL Energy or generate 23.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
DAIRY FARM INTL vs. CONSOL Energy
Performance |
| Timeline |
| DAIRY FARM INTL |
| CONSOL Energy |
DAIRY FARM and CONSOL Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with DAIRY FARM and CONSOL Energy
The main advantage of trading using opposite DAIRY FARM and CONSOL Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if DAIRY FARM position performs unexpectedly, CONSOL Energy 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 CONSOL Energy will offset losses from the drop in CONSOL Energy's long position.| DAIRY FARM vs. SIVERS SEMICONDUCTORS AB | DAIRY FARM vs. Darden Restaurants | DAIRY FARM vs. Reliance Steel Aluminum | DAIRY FARM vs. Q2M Managementberatung AG |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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