Correlation Between Consol Energy and Beauty Health

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Can any of the company-specific risk be diversified away by investing in both Consol Energy and Beauty Health 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 Consol Energy and Beauty Health into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Consol Energy and Beauty Health Co, you can compare the effects of market volatilities on Consol Energy and Beauty Health 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 Consol Energy with a short position of Beauty Health. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and Beauty Health.

Diversification Opportunities for Consol Energy and Beauty Health

0.09
  Correlation Coefficient

Significant diversification

The 3 months correlation between Consol and Beauty is 0.09. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and Beauty Health Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Beauty Health and Consol Energy 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 Consol Energy are associated (or correlated) with Beauty Health. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Beauty Health has no effect on the direction of Consol Energy i.e., Consol Energy and Beauty Health go up and down completely randomly.

Pair Corralation between Consol Energy and Beauty Health

Given the investment horizon of 90 days Consol Energy is expected to generate 0.44 times more return on investment than Beauty Health. However, Consol Energy is 2.27 times less risky than Beauty Health. It trades about 0.03 of its potential returns per unit of risk. Beauty Health Co is currently generating about 0.0 per unit of risk. If you would invest  9,896  in Consol Energy on September 23, 2024 and sell it today you would earn a total of  473.00  from holding Consol Energy or generate 4.78% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthInsignificant
Accuracy100.0%
ValuesDaily Returns

Consol Energy  vs.  Beauty Health Co

 Performance 
       Timeline  
Consol Energy 

Risk-Adjusted Performance

4 of 100

 
Weak
 
Strong
Insignificant
Compared to the overall equity markets, risk-adjusted returns on investments in Consol Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Consol Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Beauty Health 

Risk-Adjusted Performance

2 of 100

 
Weak
 
Strong
Weak
Compared to the overall equity markets, risk-adjusted returns on investments in Beauty Health Co are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very weak forward indicators, Beauty Health may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Consol Energy and Beauty Health Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Consol Energy and Beauty Health

The main advantage of trading using opposite Consol Energy and Beauty Health positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, Beauty Health 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 Beauty Health will offset losses from the drop in Beauty Health's long position.
The idea behind Consol Energy and Beauty Health Co 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.
Check out your portfolio center.
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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.

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