Correlation Between NioCorp Developments and Consol Energy
Can any of the company-specific risk be diversified away by investing in both NioCorp Developments and Consol 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 NioCorp Developments and Consol Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NioCorp Developments Ltd and Consol Energy, you can compare the effects of market volatilities on NioCorp Developments and Consol 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 NioCorp Developments with a short position of Consol Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of NioCorp Developments and Consol Energy.
Diversification Opportunities for NioCorp Developments and Consol Energy
-0.71 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NioCorp and Consol is -0.71. Overlapping area represents the amount of risk that can be diversified away by holding NioCorp Developments Ltd and Consol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consol Energy and NioCorp Developments 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 NioCorp Developments Ltd are associated (or correlated) with Consol Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Consol Energy has no effect on the direction of NioCorp Developments i.e., NioCorp Developments and Consol Energy go up and down completely randomly.
Pair Corralation between NioCorp Developments and Consol Energy
Allowing for the 90-day total investment horizon NioCorp Developments Ltd is expected to under-perform the Consol Energy. In addition to that, NioCorp Developments is 2.04 times more volatile than Consol Energy. It trades about -0.05 of its total potential returns per unit of risk. Consol Energy is currently generating about 0.1 per unit of volatility. If you would invest 9,846 in Consol Energy on September 2, 2024 and sell it today you would earn a total of 3,224 from holding Consol Energy or generate 32.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NioCorp Developments Ltd vs. Consol Energy
Performance |
| Timeline |
| NioCorp Developments |
| Consol Energy |
NioCorp Developments and Consol Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NioCorp Developments and Consol Energy
The main advantage of trading using opposite NioCorp Developments and Consol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NioCorp Developments position performs unexpectedly, Consol 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 Consol Energy will offset losses from the drop in Consol Energy's long position.| NioCorp Developments vs. Teck Resources Ltd | NioCorp Developments vs. Sigma Lithium Resources | NioCorp Developments vs. Vale SA ADR | NioCorp Developments vs. Sayona Mining Limited |
| Consol Energy vs. Alliance Resource Partners | Consol Energy vs. Natural Resource Partners | Consol Energy vs. Hallador Energy | Consol Energy 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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