Correlation Between Empire Petroleum and CNX Resources

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

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

Diversification Opportunities for Empire Petroleum and CNX Resources

0.56

Correlation Coefficient

Empire Petroleum  CNX Resources

Very weak diversification

The 3 months correlation between Empire and CNX is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Empire Petroleum Corp and CNX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNX Resources Corp and Empire Petroleum 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 Empire Petroleum Corp are associated (or correlated) with CNX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNX Resources Corp has no effect on the direction of Empire Petroleum i.e., Empire Petroleum and CNX Resources go up and down completely randomly.

Pair Corralation between Empire Petroleum and CNX Resources

Allowing for the 90-day total investment horizon Empire Petroleum Corp is expected to under-perform the CNX Resources. In addition to that, Empire Petroleum is 1.48 times more volatile than CNX Resources Corp. It trades about -0.06 of its total potential returns per unit of risk. CNX Resources Corp is currently generating about -0.08 per unit of volatility. If you would invest  3,664  in CNX Resources Corp on December 26, 2024 and sell it today you would lose (485.00) from holding CNX Resources Corp or give up 13.24% of portfolio value over 90 days.

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

Empire Petroleum Corp  vs.  CNX Resources Corp

Empire Petroleum Corp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Empire Petroleum Corp has generated negative risk-adjusted returns adding no value to investors with long positions. Even with weak performance in the last few months, the Stock's basic indicators remain relatively invariable which may send shares a bit higher in April 2025. The latest agitation may also be a sign of long-running up-swing for the enterprise retail investors.

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 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.

Pair Trading with Empire Petroleum and CNX Resources

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

The idea behind Empire Petroleum Corp and CNX Resources Corp 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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.