Correlation Between Ichor Coal and CONSOL Energy

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

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

Diversification Opportunities for Ichor Coal and CONSOL Energy

-0.68

Correlation Coefficient

Ichor Coal  CONSOL Energy

Excellent diversification

The 3 months correlation between Ichor and CONSOL is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding Ichor Coal NV and CONSOL Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CONSOL Energy and Ichor Coal 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 Ichor Coal NV 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 Ichor Coal i.e., Ichor Coal and CONSOL Energy go up and down completely randomly.

Pair Corralation between Ichor Coal and CONSOL Energy

Assuming the 90 days trading horizon Ichor Coal NV is expected to generate 2.69 times more return on investment than CONSOL Energy. However, Ichor Coal is 2.69 times more volatile than CONSOL Energy. It trades about 0.54 of its potential returns per unit of risk. CONSOL Energy is currently generating about -0.17 per unit of risk. If you would invest  2.00  in Ichor Coal NV on October 11, 2024 and sell it today you would earn a total of  1.00  from holding Ichor Coal NV or generate 50.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	88.24%
Values	Daily Returns

Ichor Coal NV  vs.  CONSOL Energy

Ichor Coal NV

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Ichor Coal NV are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain basic indicators, Ichor Coal may actually be approaching a critical reversion point that can send shares even higher in February 2025.

CONSOL Energy

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in CONSOL Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly uncertain basic indicators, CONSOL Energy may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Ichor Coal and CONSOL Energy

The main advantage of trading using opposite Ichor Coal and CONSOL Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ichor Coal 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 Ichor Coal NV 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 Stocks Directory module to find actively traded stocks across global markets.