Correlation Between Baldwin Insurance and Consol Energy

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

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

Diversification Opportunities for Baldwin Insurance and Consol Energy

0.15

Correlation Coefficient

Baldwin Insurance  Consol Energy

Average diversification

The 3 months correlation between Baldwin and Consol is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding The Baldwin Insurance and Consol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consol Energy and Baldwin Insurance 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 The Baldwin Insurance 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 Baldwin Insurance i.e., Baldwin Insurance and Consol Energy go up and down completely randomly.

Pair Corralation between Baldwin Insurance and Consol Energy

Given the investment horizon of 90 days Baldwin Insurance is expected to generate 2.08 times less return on investment than Consol Energy. But when comparing it to its historical volatility, The Baldwin Insurance is 1.05 times less risky than Consol Energy. It trades about 0.03 of its potential returns per unit of risk. Consol Energy is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  5,723  in Consol Energy on October 9, 2024 and sell it today you would earn a total of  4,767  from holding Consol Energy or generate 83.3% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

The Baldwin Insurance  vs.  Consol Energy

Baldwin Insurance

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Baldwin Insurance has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's forward indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Consol Energy

Risk-Adjusted Performance

0 of 100

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 Baldwin Insurance and Consol Energy

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