Correlation Between Lifevantage and Consol Energy

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

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

Diversification Opportunities for Lifevantage and Consol Energy

0.84

Correlation Coefficient

Lifevantage  Consol Energy

Very poor diversification

The 3 months correlation between Lifevantage and Consol is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Lifevantage and Consol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consol Energy and Lifevantage 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 Lifevantage 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 Lifevantage i.e., Lifevantage and Consol Energy go up and down completely randomly.

Pair Corralation between Lifevantage and Consol Energy

Given the investment horizon of 90 days Lifevantage is expected to generate 1.94 times more return on investment than Consol Energy. However, Lifevantage is 1.94 times more volatile than Consol Energy. It trades about 0.2 of its potential returns per unit of risk. Consol Energy is currently generating about 0.22 per unit of risk. If you would invest  894.00  in Lifevantage on September 5, 2024 and sell it today you would earn a total of  590.00  from holding Lifevantage or generate 66.0% return on investment over 90 days.

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

Lifevantage  vs.  Consol Energy

Lifevantage

Risk-Adjusted Performance

15 of 100

Good

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

Consol Energy

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Consol Energy are ranked lower than 17 (%) 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.

Pair Trading with Lifevantage and Consol Energy

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

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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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.