Correlation Between Fernhill Beverage and Consol Energy

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

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

Diversification Opportunities for Fernhill Beverage and Consol Energy

0.0

Correlation Coefficient

Fernhill Beverage  Consol Energy

Pay attention - limited upside

The 3 months correlation between Fernhill and Consol is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Fernhill Beverage and Consol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consol Energy and Fernhill Beverage 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 Fernhill Beverage 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 Fernhill Beverage i.e., Fernhill Beverage and Consol Energy go up and down completely randomly.

Pair Corralation between Fernhill Beverage and Consol Energy

If you would invest  9,530  in Consol Energy on September 15, 2024 and sell it today you would earn a total of  2,118  from holding Consol Energy or generate 22.22% return on investment over 90 days.

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

Fernhill Beverage  vs.  Consol Energy

Fernhill Beverage

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Fernhill Beverage has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental drivers, Fernhill Beverage is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Consol Energy

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Consol Energy are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. In spite of fairly weak forward indicators, Consol Energy showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Fernhill Beverage and Consol Energy

The main advantage of trading using opposite Fernhill Beverage and Consol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fernhill Beverage 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 Fernhill Beverage 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 Transaction History module to view history of all your transactions and understand their impact on performance.