Correlation Between Warrior Met and SunCoke Energy
Can any of the company-specific risk be diversified away by investing in both Warrior Met and SunCoke 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 Warrior Met and SunCoke Energy 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 SunCoke Energy, you can compare the effects of market volatilities on Warrior Met and SunCoke 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 Warrior Met with a short position of SunCoke Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Warrior Met and SunCoke Energy.
Diversification Opportunities for Warrior Met and SunCoke Energy
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Warrior and SunCoke is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Warrior Met Coal and SunCoke Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SunCoke Energy 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 SunCoke Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SunCoke Energy has no effect on the direction of Warrior Met i.e., Warrior Met and SunCoke Energy go up and down completely randomly.
Pair Corralation between Warrior Met and SunCoke Energy
Considering the 90-day investment horizon Warrior Met is expected to generate 2.36 times less return on investment than SunCoke Energy. But when comparing it to its historical volatility, Warrior Met Coal is 1.55 times less risky than SunCoke Energy. It trades about 0.26 of its potential returns per unit of risk. SunCoke Energy is currently generating about 0.39 of returns per unit of risk over similar time horizon. If you would invest 837.00 in SunCoke Energy on August 23, 2024 and sell it today you would earn a total of 425.00 from holding SunCoke Energy or generate 50.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Warrior Met Coal vs. SunCoke Energy
Performance |
| Timeline |
| Warrior Met Coal |
| SunCoke Energy |
Warrior Met and SunCoke Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Warrior Met and SunCoke Energy
The main advantage of trading using opposite Warrior Met and SunCoke Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Warrior Met position performs unexpectedly, SunCoke 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 SunCoke Energy will offset losses from the drop in SunCoke Energy'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 |
| SunCoke Energy vs. Warrior Met Coal | SunCoke Energy vs. Arch Resources | SunCoke Energy vs. Alpha Metallurgical Resources | SunCoke Energy vs. American Resources Corp |
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 Idea Optimizer module to use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio .
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