Correlation Between Warrior Met and Colonial Coal
Can any of the company-specific risk be diversified away by investing in both Warrior Met and Colonial Coal 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 Warrior Met and Colonial Coal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Warrior Met Coal and Colonial Coal International, you can compare the effects of market volatilities on Warrior Met and Colonial Coal 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 Warrior Met with a short position of Colonial Coal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warrior Met and Colonial Coal.
Diversification Opportunities for Warrior Met and Colonial Coal
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Warrior and Colonial is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding Warrior Met Coal and Colonial Coal International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Colonial Coal Intern and Warrior Met 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 Warrior Met Coal are associated (or correlated) with Colonial Coal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Colonial Coal Intern has no effect on the direction of Warrior Met i.e., Warrior Met and Colonial Coal go up and down completely randomly.
Pair Corralation between Warrior Met and Colonial Coal
Considering the 90-day investment horizon Warrior Met Coal is expected to generate 0.54 times more return on investment than Colonial Coal. However, Warrior Met Coal is 1.87 times less risky than Colonial Coal. It trades about -0.05 of its potential returns per unit of risk. Colonial Coal International is currently generating about -0.07 per unit of risk. If you would invest 6,556 in Warrior Met Coal on September 14, 2024 and sell it today you would lose (190.00) from holding Warrior Met Coal or give up 2.9% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Warrior Met Coal vs. Colonial Coal International
Performance |
| Timeline |
| Warrior Met Coal |
| Colonial Coal Intern |
Warrior Met and Colonial Coal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warrior Met and Colonial Coal
The main advantage of trading using opposite Warrior Met and Colonial Coal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warrior Met position performs unexpectedly, Colonial Coal 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 Colonial Coal will offset losses from the drop in Colonial Coal's long position.| Warrior Met vs. SunCoke Energy | Warrior Met vs. Arch Resources | Warrior Met vs. Alpha Metallurgical Resources | Warrior Met vs. American Resources Corp |
| Colonial Coal vs. Coronado Global Resources | Colonial Coal vs. Arch Resources | Colonial Coal vs. Alpha Metallurgical Resources | Colonial Coal vs. Warrior Met Coal |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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