Correlation Between FARO Technologies and CONSOL Energy
Can any of the company-specific risk be diversified away by investing in both FARO Technologies 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 FARO Technologies and CONSOL Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FARO Technologies and CONSOL Energy, you can compare the effects of market volatilities on FARO Technologies 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 FARO Technologies with a short position of CONSOL Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of FARO Technologies and CONSOL Energy.
Diversification Opportunities for FARO Technologies and CONSOL Energy
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between FARO and CONSOL is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding FARO Technologies and CONSOL Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOL Energy and FARO Technologies 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 FARO Technologies 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 FARO Technologies i.e., FARO Technologies and CONSOL Energy go up and down completely randomly.
Pair Corralation between FARO Technologies and CONSOL Energy
Assuming the 90 days horizon FARO Technologies is expected to generate 2.45 times more return on investment than CONSOL Energy. However, FARO Technologies is 2.45 times more volatile than CONSOL Energy. It trades about 0.29 of its potential returns per unit of risk. CONSOL Energy is currently generating about 0.32 per unit of risk. If you would invest 1,600 in FARO Technologies on September 2, 2024 and sell it today you would earn a total of 880.00 from holding FARO Technologies or generate 55.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
FARO Technologies vs. CONSOL Energy
Performance |
| Timeline |
| FARO Technologies |
| CONSOL Energy |
FARO Technologies and CONSOL Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with FARO Technologies and CONSOL Energy
The main advantage of trading using opposite FARO Technologies and CONSOL Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FARO Technologies 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.| FARO Technologies vs. MTI WIRELESS EDGE | FARO Technologies vs. Gol Intelligent Airlines | FARO Technologies vs. Gamma Communications plc | FARO Technologies vs. Spirent Communications plc |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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