Correlation Between Consol Energy and 207597EG6

Can any of the company-specific risk be diversified away by investing in both Consol Energy and 207597EG6 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 Consol Energy and 207597EG6 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Consol Energy and CONNECTICUT LT PWR, you can compare the effects of market volatilities on Consol Energy and 207597EG6 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 Consol Energy with a short position of 207597EG6. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and 207597EG6.

Diversification Opportunities for Consol Energy and 207597EG6

-0.46

Correlation Coefficient

Consol Energy  207597EG6

Very good diversification

The 3 months correlation between Consol and 207597EG6 is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and CONNECTICUT LT PWR in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONNECTICUT LT PWR and Consol 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 Consol Energy are associated (or correlated) with 207597EG6. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONNECTICUT LT PWR has no effect on the direction of Consol Energy i.e., Consol Energy and 207597EG6 go up and down completely randomly.

Pair Corralation between Consol Energy and 207597EG6

Given the investment horizon of 90 days Consol Energy is expected to generate 1.81 times more return on investment than 207597EG6. However, Consol Energy is 1.81 times more volatile than CONNECTICUT LT PWR. It trades about 0.21 of its potential returns per unit of risk. CONNECTICUT LT PWR is currently generating about -0.14 per unit of risk. If you would invest  9,446  in Consol Energy on September 4, 2024 and sell it today you would earn a total of  3,338  from holding Consol Energy or generate 35.34% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	73.02%
Values	Daily Returns

Consol Energy  vs.  CONNECTICUT LT PWR

Consol Energy

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Consol Energy are ranked lower than 16 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Consol Energy showed solid returns over the last few months and may actually be approaching a breakup point.

CONNECTICUT LT PWR

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days CONNECTICUT LT PWR has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest uncertain performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for CONNECTICUT LT PWR investors.

Pair Trading with Consol Energy and 207597EG6

The main advantage of trading using opposite Consol Energy and 207597EG6 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, 207597EG6 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 207597EG6 will offset losses from the drop in 207597EG6's long position.

The idea behind Consol Energy and CONNECTICUT LT PWR 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.

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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 Global Correlations module to find global opportunities by holding instruments from different markets.