Correlation Between Hallador Energy and Alliance Resource
Can any of the company-specific risk be diversified away by investing in both Hallador Energy and Alliance Resource 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 Hallador Energy and Alliance Resource into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hallador Energy and Alliance Resource Partners, you can compare the effects of market volatilities on Hallador Energy and Alliance Resource 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 Hallador Energy with a short position of Alliance Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hallador Energy and Alliance Resource.
Diversification Opportunities for Hallador Energy and Alliance Resource
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hallador and Alliance is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Hallador Energy and Alliance Resource Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alliance Resource and Hallador Energy 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 Hallador Energy are associated (or correlated) with Alliance Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alliance Resource has no effect on the direction of Hallador Energy i.e., Hallador Energy and Alliance Resource go up and down completely randomly.
Pair Corralation between Hallador Energy and Alliance Resource
Given the investment horizon of 90 days Hallador Energy is expected to generate 2.06 times more return on investment than Alliance Resource. However, Hallador Energy is 2.06 times more volatile than Alliance Resource Partners. It trades about 0.27 of its potential returns per unit of risk. Alliance Resource Partners is currently generating about 0.32 per unit of risk. If you would invest 1,124 in Hallador Energy on October 20, 2024 and sell it today you would earn a total of 144.00 from holding Hallador Energy or generate 12.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hallador Energy vs. Alliance Resource Partners
Performance |
| Timeline |
| Hallador Energy |
| Alliance Resource |
Hallador Energy and Alliance Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hallador Energy and Alliance Resource
The main advantage of trading using opposite Hallador Energy and Alliance Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hallador Energy position performs unexpectedly, Alliance Resource 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 Alliance Resource will offset losses from the drop in Alliance Resource's long position.| Hallador Energy vs. Natural Resource Partners | Hallador Energy vs. Consol Energy | Hallador Energy vs. Adaro Energy Tbk | Hallador Energy vs. Alliance Resource Partners |
| Alliance Resource vs. Peabody Energy Corp | Alliance Resource vs. Natural Resource Partners | Alliance Resource vs. Hallador Energy | Alliance Resource 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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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