Correlation Between Pinterest and Consol Energy

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

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

Diversification Opportunities for Pinterest and Consol Energy

-0.23

Correlation Coefficient

Pinterest  Consol Energy

Very good diversification

The 3 months correlation between Pinterest and Consol is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Pinterest and Consol Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Consol Energy and Pinterest 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 Pinterest 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 Pinterest i.e., Pinterest and Consol Energy go up and down completely randomly.

Pair Corralation between Pinterest and Consol Energy

Given the investment horizon of 90 days Pinterest is expected to generate 1.09 times more return on investment than Consol Energy. However, Pinterest is 1.09 times more volatile than Consol Energy. It trades about -0.01 of its potential returns per unit of risk. Consol Energy is currently generating about -0.03 per unit of risk. If you would invest  3,154  in Pinterest on October 23, 2024 and sell it today you would lose (101.00) from holding Pinterest or give up 3.2% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.0%
Values	Daily Returns

Pinterest  vs.  Consol Energy

Pinterest

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pinterest has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Pinterest is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Consol Energy

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Consol Energy has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong forward indicators, Consol Energy is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pinterest and Consol Energy

The main advantage of trading using opposite Pinterest and Consol Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pinterest 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 Pinterest 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.