Correlation Between ESSILORLUXOTTICA and CONSOL Energy
Can any of the company-specific risk be diversified away by investing in both ESSILORLUXOTTICA and CONSOL 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 ESSILORLUXOTTICA and CONSOL Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ESSILORLUXOTTICA 12ON and CONSOL Energy, you can compare the effects of market volatilities on ESSILORLUXOTTICA and CONSOL 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 ESSILORLUXOTTICA with a short position of CONSOL Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ESSILORLUXOTTICA and CONSOL Energy.
Diversification Opportunities for ESSILORLUXOTTICA and CONSOL Energy
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ESSILORLUXOTTICA and CONSOL is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding ESSILORLUXOTTICA 12ON and CONSOL Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOL Energy and ESSILORLUXOTTICA 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 ESSILORLUXOTTICA 12ON are associated (or correlated) with CONSOL Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CONSOL Energy has no effect on the direction of ESSILORLUXOTTICA i.e., ESSILORLUXOTTICA and CONSOL Energy go up and down completely randomly.
Pair Corralation between ESSILORLUXOTTICA and CONSOL Energy
Assuming the 90 days trading horizon ESSILORLUXOTTICA is expected to generate 1.48 times less return on investment than CONSOL Energy. But when comparing it to its historical volatility, ESSILORLUXOTTICA 12ON is 1.84 times less risky than CONSOL Energy. It trades about 0.16 of its potential returns per unit of risk. CONSOL Energy is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 8,616 in CONSOL Energy on September 24, 2024 and sell it today you would earn a total of 1,734 from holding CONSOL Energy or generate 20.13% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
ESSILORLUXOTTICA 12ON vs. CONSOL Energy
Performance |
Timeline |
ESSILORLUXOTTICA 12ON |
CONSOL Energy |
ESSILORLUXOTTICA and CONSOL Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ESSILORLUXOTTICA and CONSOL Energy
The main advantage of trading using opposite ESSILORLUXOTTICA and CONSOL Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ESSILORLUXOTTICA position performs unexpectedly, CONSOL 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 CONSOL Energy will offset losses from the drop in CONSOL Energy's long position.ESSILORLUXOTTICA vs. Intuitive Surgical | ESSILORLUXOTTICA vs. EssilorLuxottica Socit anonyme | ESSILORLUXOTTICA vs. Resmed Inc DRC | ESSILORLUXOTTICA vs. ResMed Inc |
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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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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