Correlation Between National Beverage and Consol Energy
Can any of the company-specific risk be diversified away by investing in both National Beverage 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 National Beverage and Consol Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between National Beverage Corp and Consol Energy, you can compare the effects of market volatilities on National Beverage 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 National Beverage with a short position of Consol Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of National Beverage and Consol Energy.
Diversification Opportunities for National Beverage and Consol Energy
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between National and Consol is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding National Beverage Corp and Consol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consol Energy and National Beverage 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 National Beverage Corp 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 National Beverage i.e., National Beverage and Consol Energy go up and down completely randomly.
Pair Corralation between National Beverage and Consol Energy
Given the investment horizon of 90 days National Beverage is expected to generate 2.74 times less return on investment than Consol Energy. But when comparing it to its historical volatility, National Beverage Corp is 1.92 times less risky than Consol Energy. It trades about 0.12 of its potential returns per unit of risk. Consol Energy is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 10,207 in Consol Energy on August 30, 2024 and sell it today you would earn a total of 2,932 from holding Consol Energy or generate 28.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
National Beverage Corp vs. Consol Energy
Performance |
| Timeline |
| National Beverage Corp |
| Consol Energy |
National Beverage and Consol Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with National Beverage and Consol Energy
The main advantage of trading using opposite National Beverage and Consol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if National Beverage 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.| National Beverage vs. Celsius Holdings | National Beverage vs. Monster Beverage Corp | National Beverage vs. Coca Cola Femsa SAB | National Beverage vs. Keurig Dr Pepper |
| Consol Energy vs. Alliance Resource Partners | Consol Energy vs. Natural Resource Partners | Consol Energy vs. Hallador Energy | Consol Energy vs. NACCO Industries |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
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