Correlation Between CNX Resources and Granite Ridge

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

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

Diversification Opportunities for CNX Resources and Granite Ridge

0.63

Correlation Coefficient

CNX Resources  Granite Ridge

Poor diversification

The 3 months correlation between CNX and Granite is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding CNX Resources Corp and Granite Ridge Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Granite Ridge Resources and CNX Resources 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 CNX Resources Corp are associated (or correlated) with Granite Ridge. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Granite Ridge Resources has no effect on the direction of CNX Resources i.e., CNX Resources and Granite Ridge go up and down completely randomly.

Pair Corralation between CNX Resources and Granite Ridge

Considering the 90-day investment horizon CNX Resources Corp is expected to generate 1.17 times more return on investment than Granite Ridge. However, CNX Resources is 1.17 times more volatile than Granite Ridge Resources. It trades about 0.09 of its potential returns per unit of risk. Granite Ridge Resources is currently generating about -0.06 per unit of risk. If you would invest  3,181  in CNX Resources Corp on September 21, 2024 and sell it today you would earn a total of  353.00  from holding CNX Resources Corp or generate 11.1% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

CNX Resources Corp  vs.  Granite Ridge Resources

CNX Resources Corp

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in CNX Resources Corp are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CNX Resources may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Granite Ridge Resources

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Granite Ridge Resources has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with CNX Resources and Granite Ridge

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

The idea behind CNX Resources Corp and Granite Ridge Resources 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.