Correlation Between Hallador Energy and Natural Resource
Can any of the company-specific risk be diversified away by investing in both Hallador Energy and Natural 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 Natural 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 Natural Resource Partners, you can compare the effects of market volatilities on Hallador Energy and Natural 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 Natural Resource. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hallador Energy and Natural Resource.
Diversification Opportunities for Hallador Energy and Natural Resource
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hallador and Natural is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Hallador Energy and Natural Resource Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Natural Resource Partners 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 Natural Resource. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Natural Resource Partners has no effect on the direction of Hallador Energy i.e., Hallador Energy and Natural Resource go up and down completely randomly.
Pair Corralation between Hallador Energy and Natural Resource
Given the investment horizon of 90 days Hallador Energy is expected to generate 3.21 times more return on investment than Natural Resource. However, Hallador Energy is 3.21 times more volatile than Natural Resource Partners. It trades about 0.16 of its potential returns per unit of risk. Natural Resource Partners is currently generating about 0.24 per unit of risk. If you would invest 1,043 in Hallador Energy on August 28, 2024 and sell it today you would earn a total of 231.00 from holding Hallador Energy or generate 22.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hallador Energy vs. Natural Resource Partners
Performance |
| Timeline |
| Hallador Energy |
| Natural Resource Partners |
Hallador Energy and Natural Resource Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hallador Energy and Natural Resource
The main advantage of trading using opposite Hallador Energy and Natural Resource positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hallador Energy position performs unexpectedly, Natural 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 Natural Resource will offset losses from the drop in Natural 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 |
| Natural Resource vs. Hallador Energy | Natural Resource vs. Consol Energy | Natural Resource vs. Adaro Energy Tbk | Natural Resource vs. Alliance 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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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