Correlation Between CNX Resources and Vital Energy

Can any of the company-specific risk be diversified away by investing in both CNX Resources and Vital 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 Vital 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 Vital Energy, you can compare the effects of market volatilities on CNX Resources and Vital 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 Vital Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of CNX Resources and Vital Energy.

Diversification Opportunities for CNX Resources and Vital Energy

0.34

Correlation Coefficient

CNX Resources  Vital Energy

Weak diversification

The 3 months correlation between CNX and Vital is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding CNX Resources Corp and Vital Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vital 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 Vital Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vital Energy has no effect on the direction of CNX Resources i.e., CNX Resources and Vital Energy go up and down completely randomly.

Pair Corralation between CNX Resources and Vital Energy

Considering the 90-day investment horizon CNX Resources Corp is expected to under-perform the Vital Energy. In addition to that, CNX Resources is 1.41 times more volatile than Vital Energy. It trades about -0.3 of its total potential returns per unit of risk. Vital Energy is currently generating about 0.2 per unit of volatility. If you would invest  3,143  in Vital Energy on October 12, 2024 and sell it today you would earn a total of  292.00  from holding Vital Energy or generate 9.29% return on investment over 90 days.

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

CNX Resources Corp  vs.  Vital Energy

CNX Resources Corp

Risk-Adjusted Performance

0 of 100

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

Vital Energy

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Vital Energy are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Vital Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with CNX Resources and Vital Energy

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

The idea behind CNX Resources Corp and Vital 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.

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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.