Correlation Between Stepstone and Consol Energy
Can any of the company-specific risk be diversified away by investing in both Stepstone 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 Stepstone and Consol Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Stepstone Group and Consol Energy, you can compare the effects of market volatilities on Stepstone 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 Stepstone with a short position of Consol Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Stepstone and Consol Energy.
Diversification Opportunities for Stepstone and Consol Energy
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Stepstone and Consol is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Stepstone Group and Consol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consol Energy and Stepstone 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 Stepstone Group 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 Stepstone i.e., Stepstone and Consol Energy go up and down completely randomly.
Pair Corralation between Stepstone and Consol Energy
Given the investment horizon of 90 days Stepstone is expected to generate 2.1 times less return on investment than Consol Energy. But when comparing it to its historical volatility, Stepstone Group is 1.01 times less risky than Consol Energy. It trades about 0.14 of its potential returns per unit of risk. Consol Energy is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 10,913 in Consol Energy on August 27, 2024 and sell it today you would earn a total of 2,260 from holding Consol Energy or generate 20.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Stepstone Group vs. Consol Energy
Performance |
| Timeline |
| Stepstone Group |
| Consol Energy |
Stepstone and Consol Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Stepstone and Consol Energy
The main advantage of trading using opposite Stepstone and Consol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stepstone 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.| Stepstone vs. Munivest Fund | Stepstone vs. Blackrock Muniyield Quality | Stepstone vs. Federated Investors B | Stepstone vs. Federated Premier Municipal |
| 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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
Other Complementary Tools
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities |