Correlation Between Consol Energy and PACIFIC

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

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

Diversification Opportunities for Consol Energy and PACIFIC

-0.2

Correlation Coefficient

Consol Energy  PACIFIC

Good diversification

The 3 months correlation between Consol and PACIFIC is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Consol Energy and PACIFIC GAS AND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PACIFIC GAS AND 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 PACIFIC. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PACIFIC GAS AND has no effect on the direction of Consol Energy i.e., Consol Energy and PACIFIC go up and down completely randomly.

Pair Corralation between Consol Energy and PACIFIC

Given the investment horizon of 90 days Consol Energy is expected to under-perform the PACIFIC. In addition to that, Consol Energy is 2.8 times more volatile than PACIFIC GAS AND. It trades about -0.23 of its total potential returns per unit of risk. PACIFIC GAS AND is currently generating about -0.12 per unit of volatility. If you would invest  9,663  in PACIFIC GAS AND on October 9, 2024 and sell it today you would lose (110.00) from holding PACIFIC GAS AND or give up 1.14% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	75.0%
Values	Daily Returns

Consol Energy  vs.  PACIFIC GAS AND

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.

PACIFIC GAS AND

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days PACIFIC GAS AND has generated negative risk-adjusted returns adding no value to investors with long positions. Despite latest weak performance, the Bond's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for PACIFIC GAS AND investors.

Pair Trading with Consol Energy and PACIFIC

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

The idea behind Consol Energy and PACIFIC GAS AND 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.