Correlation Between Alliance Resource and Consol Energy

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

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

Diversification Opportunities for Alliance Resource and Consol Energy

0.0

Correlation Coefficient

Alliance Resource  Consol Energy

Pay attention - limited upside

The 3 months correlation between Alliance and Consol is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Alliance Resource Partners and Consol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consol Energy and Alliance Resource 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 Alliance Resource Partners 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 Alliance Resource i.e., Alliance Resource and Consol Energy go up and down completely randomly.

Pair Corralation between Alliance Resource and Consol Energy

If you would invest  1,625  in Alliance Resource Partners on November 19, 2024 and sell it today you would earn a total of  1,051  from holding Alliance Resource Partners or generate 64.68% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Alliance Resource Partners  vs.  Consol Energy

Alliance Resource

Risk-Adjusted Performance

Very Weak

Over the last 90 days Alliance Resource Partners has generated negative risk-adjusted returns adding no value to investors with long positions. Even with relatively invariable essential indicators, Alliance Resource is not utilizing all of its potentials. The newest stock price agitation, may contribute to short-term losses for the retail investors.

Consol Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Consol Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Consol Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Alliance Resource and Consol Energy

The main advantage of trading using opposite Alliance Resource and Consol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Alliance Resource 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 Alliance Resource Partners 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.