Correlation Between Blue Moon and Consol Energy

Can any of the company-specific risk be diversified away by investing in both Blue Moon 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 Blue Moon and Consol Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Blue Moon Metals and Consol Energy, you can compare the effects of market volatilities on Blue Moon 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 Blue Moon with a short position of Consol Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Blue Moon and Consol Energy.

Diversification Opportunities for Blue Moon and Consol Energy

0.61

Correlation Coefficient

Blue Moon  Consol Energy

Poor diversification

The 3 months correlation between Blue and Consol is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Blue Moon Metals and Consol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consol Energy and Blue Moon 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 Blue Moon Metals 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 Blue Moon i.e., Blue Moon and Consol Energy go up and down completely randomly.

Pair Corralation between Blue Moon and Consol Energy

Assuming the 90 days horizon Blue Moon Metals is expected to generate 0.52 times more return on investment than Consol Energy. However, Blue Moon Metals is 1.94 times less risky than Consol Energy. It trades about 0.22 of its potential returns per unit of risk. Consol Energy is currently generating about -0.64 per unit of risk. If you would invest  24.00  in Blue Moon Metals on September 25, 2024 and sell it today you would earn a total of  1.00  from holding Blue Moon Metals or generate 4.17% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.24%
Values	Daily Returns

Blue Moon Metals  vs.  Consol Energy

Blue Moon Metals

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Blue Moon Metals are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Blue Moon reported solid returns over the last few months and may actually be approaching a breakup point.

Consol Energy

Risk-Adjusted Performance

2 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Consol Energy are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of fairly strong forward indicators, Consol Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Blue Moon and Consol Energy

The main advantage of trading using opposite Blue Moon and Consol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Blue Moon 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.

The idea behind Blue Moon Metals and Consol Energy pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.