Correlation Between Hallador Energy and NACCO Industries
Can any of the company-specific risk be diversified away by investing in both Hallador Energy and NACCO Industries 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 NACCO Industries into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hallador Energy and NACCO Industries, you can compare the effects of market volatilities on Hallador Energy and NACCO Industries 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 NACCO Industries. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hallador Energy and NACCO Industries.
Diversification Opportunities for Hallador Energy and NACCO Industries
-0.01 | Correlation Coefficient |
Good diversification
The 3 months correlation between Hallador and NACCO is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding Hallador Energy and NACCO Industries in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NACCO Industries 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 NACCO Industries. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NACCO Industries has no effect on the direction of Hallador Energy i.e., Hallador Energy and NACCO Industries go up and down completely randomly.
Pair Corralation between Hallador Energy and NACCO Industries
Given the investment horizon of 90 days Hallador Energy is expected to generate 2.01 times more return on investment than NACCO Industries. However, Hallador Energy is 2.01 times more volatile than NACCO Industries. It trades about 0.05 of its potential returns per unit of risk. NACCO Industries is currently generating about -0.01 per unit of risk. If you would invest 818.00 in Hallador Energy on November 9, 2024 and sell it today you would earn a total of 257.00 from holding Hallador Energy or generate 31.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hallador Energy vs. NACCO Industries
Performance |
| Timeline |
| Hallador Energy |
| NACCO Industries |
Hallador Energy and NACCO Industries Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hallador Energy and NACCO Industries
The main advantage of trading using opposite Hallador Energy and NACCO Industries positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hallador Energy position performs unexpectedly, NACCO Industries 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 NACCO Industries will offset losses from the drop in NACCO Industries' long position.| Hallador Energy vs. Natural Resource Partners | Hallador Energy vs. Adaro Energy Tbk | Hallador Energy vs. Alliance Resource Partners | Hallador Energy vs. NACCO Industries |
| NACCO Industries vs. Alliance Resource Partners | NACCO Industries vs. Hallador Energy | NACCO Industries vs. Indo Tambangraya Megah | NACCO Industries vs. Natural Resource Partners |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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