Correlation Between Dave Busters and CONSOL Energy

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

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

Diversification Opportunities for Dave Busters and CONSOL Energy

0.41

Correlation Coefficient

Dave Busters  CONSOL Energy

Very weak diversification

The 3 months correlation between Dave and CONSOL is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding Dave Busters Entertainment and CONSOL Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOL Energy and Dave Busters 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 Dave Busters Entertainment 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 Dave Busters i.e., Dave Busters and CONSOL Energy go up and down completely randomly.

Pair Corralation between Dave Busters and CONSOL Energy

Assuming the 90 days horizon Dave Busters Entertainment is expected to under-perform the CONSOL Energy. In addition to that, Dave Busters is 2.73 times more volatile than CONSOL Energy. It trades about -0.16 of its total potential returns per unit of risk. CONSOL Energy is currently generating about -0.15 per unit of volatility. If you would invest  11,005  in CONSOL Energy on October 10, 2024 and sell it today you would lose (560.00) from holding CONSOL Energy or give up 5.09% of portfolio value over 90 days.

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

Dave Busters Entertainment  vs.  CONSOL Energy

Dave Busters Enterta

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Dave Busters Entertainment are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, Dave Busters is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

CONSOL Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CONSOL Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CONSOL Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Dave Busters and CONSOL Energy

The main advantage of trading using opposite Dave Busters and CONSOL Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dave Busters 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 Dave Busters Entertainment 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.