Correlation Between European Wax and Consol Energy

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

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

Diversification Opportunities for European Wax and Consol Energy

-0.18

Correlation Coefficient

European Wax  Consol Energy

Good diversification

The 3 months correlation between European and Consol is -0.18. Overlapping area represents the amount of risk that can be diversified away by holding European Wax Center and Consol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consol Energy and European Wax 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 European Wax Center 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 European Wax i.e., European Wax and Consol Energy go up and down completely randomly.

Pair Corralation between European Wax and Consol Energy

Given the investment horizon of 90 days European Wax Center is expected to under-perform the Consol Energy. In addition to that, European Wax is 1.83 times more volatile than Consol Energy. It trades about -0.09 of its total potential returns per unit of risk. Consol Energy is currently generating about 0.03 per unit of volatility. If you would invest  9,896  in Consol Energy on September 23, 2024 and sell it today you would earn a total of  473.00  from holding Consol Energy or generate 4.78% return on investment over 90 days.

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

European Wax Center  vs.  Consol Energy

European Wax Center

Risk-Adjusted Performance

0 of 100

Very Weak

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

Consol Energy

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Consol Energy are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Consol Energy may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with European Wax and Consol Energy

The main advantage of trading using opposite European Wax and Consol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if European Wax 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.

The idea behind European Wax Center and Consol 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.