Correlation Between Consol Energy and SmartStop Self

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

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

Diversification Opportunities for Consol Energy and SmartStop Self

-0.35

Correlation Coefficient

Consol Energy  SmartStop Self

Very good diversification

The 3 months correlation between Consol and SmartStop is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and SmartStop Self Storage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SmartStop Self Storage 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 SmartStop Self. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SmartStop Self Storage has no effect on the direction of Consol Energy i.e., Consol Energy and SmartStop Self go up and down completely randomly.

Pair Corralation between Consol Energy and SmartStop Self

Given the investment horizon of 90 days Consol Energy is expected to under-perform the SmartStop Self. In addition to that, Consol Energy is 3.46 times more volatile than SmartStop Self Storage. It trades about -0.03 of its total potential returns per unit of risk. SmartStop Self Storage is currently generating about 0.17 per unit of volatility. If you would invest  880.00  in SmartStop Self Storage on October 23, 2024 and sell it today you would earn a total of  70.00  from holding SmartStop Self Storage or generate 7.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	90.48%
Values	Daily Returns

Consol Energy  vs.  SmartStop Self Storage

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.

SmartStop Self Storage

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in SmartStop Self Storage are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain technical and fundamental indicators, SmartStop Self may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Consol Energy and SmartStop Self

The main advantage of trading using opposite Consol Energy and SmartStop Self positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, SmartStop Self 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 SmartStop Self will offset losses from the drop in SmartStop Self's long position.

The idea behind Consol Energy and SmartStop Self Storage 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.