Correlation Between Chord Energy and CNX Resources

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

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

Diversification Opportunities for Chord Energy and CNX Resources

-0.41

Correlation Coefficient

Chord Energy  CNX Resources

Very good diversification

The 3 months correlation between Chord and CNX is -0.41. Overlapping area represents the amount of risk that can be diversified away by holding Chord Energy Corp and CNX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNX Resources Corp and Chord 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 Chord Energy Corp are associated (or correlated) with CNX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNX Resources Corp has no effect on the direction of Chord Energy i.e., Chord Energy and CNX Resources go up and down completely randomly.

Pair Corralation between Chord Energy and CNX Resources

Given the investment horizon of 90 days Chord Energy Corp is expected to under-perform the CNX Resources. But the stock apears to be less risky and, when comparing its historical volatility, Chord Energy Corp is 1.33 times less risky than CNX Resources. The stock trades about -0.11 of its potential returns per unit of risk. The CNX Resources Corp is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  2,851  in CNX Resources Corp on September 17, 2024 and sell it today you would earn a total of  928.00  from holding CNX Resources Corp or generate 32.55% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Chord Energy Corp  vs.  CNX Resources Corp

Chord Energy Corp

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Chord Energy Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest inconsistent performance, the Stock's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the firm shareholders.

CNX Resources Corp

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CNX Resources Corp are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CNX Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Chord Energy and CNX Resources

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

The idea behind Chord Energy Corp and CNX Resources Corp 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.