Correlation Between CNX Resources and Diversified Energy

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

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

Diversification Opportunities for CNX Resources and Diversified Energy

0.15

Correlation Coefficient

CNX Resources  Diversified Energy

Average diversification

The 3 months correlation between CNX and Diversified is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding CNX Resources Corp and Diversified Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diversified Energy and CNX Resources 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 CNX Resources Corp are associated (or correlated) with Diversified Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diversified Energy has no effect on the direction of CNX Resources i.e., CNX Resources and Diversified Energy go up and down completely randomly.

Pair Corralation between CNX Resources and Diversified Energy

Considering the 90-day investment horizon CNX Resources Corp is expected to generate 0.91 times more return on investment than Diversified Energy. However, CNX Resources Corp is 1.1 times less risky than Diversified Energy. It trades about -0.08 of its potential returns per unit of risk. Diversified Energy is currently generating about -0.09 per unit of risk. If you would invest  3,664  in CNX Resources Corp on December 26, 2024 and sell it today you would lose (514.00) from holding CNX Resources Corp or give up 14.03% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

CNX Resources Corp  vs.  Diversified Energy

CNX Resources Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days CNX Resources Corp has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unfluctuating performance in the last few months, the Stock's basic indicators remain fairly strong which may send shares a bit higher in April 2025. The current disturbance may also be a sign of long term up-swing for the company investors.

Diversified Energy

Risk-Adjusted Performance

Very Weak

Over the last 90 days Diversified Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with CNX Resources and Diversified Energy

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

The idea behind CNX Resources Corp and Diversified 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.