Correlation Between Consol Energy and 00108WAN0

Can any of the company-specific risk be diversified away by investing in both Consol Energy and 00108WAN0 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 00108WAN0 into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Consol Energy and AEP 345 15 MAY 51, you can compare the effects of market volatilities on Consol Energy and 00108WAN0 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 00108WAN0. Check out your portfolio center. Please also check ongoing floating volatility patterns of Consol Energy and 00108WAN0.

Diversification Opportunities for Consol Energy and 00108WAN0

-0.08

Correlation Coefficient

Consol Energy  00108WAN0

Good diversification

The 3 months correlation between Consol and 00108WAN0 is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and AEP 345 15 MAY 51 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AEP 345 15 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 00108WAN0. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AEP 345 15 has no effect on the direction of Consol Energy i.e., Consol Energy and 00108WAN0 go up and down completely randomly.

Pair Corralation between Consol Energy and 00108WAN0

Given the investment horizon of 90 days Consol Energy is expected to under-perform the 00108WAN0. In addition to that, Consol Energy is 1.39 times more volatile than AEP 345 15 MAY 51. It trades about -0.05 of its total potential returns per unit of risk. AEP 345 15 MAY 51 is currently generating about 0.0 per unit of volatility. If you would invest  6,799  in AEP 345 15 MAY 51 on October 26, 2024 and sell it today you would lose (24.00) from holding AEP 345 15 MAY 51 or give up 0.35% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	83.33%
Values	Daily Returns

Consol Energy  vs.  AEP 345 15 MAY 51

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 latest weak performance, the Stock's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the company investors.

AEP 345 15

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AEP 345 15 MAY 51 has generated negative risk-adjusted returns adding no value to investors with long positions. Despite somewhat strong basic indicators, 00108WAN0 is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Consol Energy and 00108WAN0

The main advantage of trading using opposite Consol Energy and 00108WAN0 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Consol Energy position performs unexpectedly, 00108WAN0 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 00108WAN0 will offset losses from the drop in 00108WAN0's long position.

The idea behind Consol Energy and AEP 345 15 MAY 51 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.