Correlation Between SDX Energy and CNX Resources

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

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

Diversification Opportunities for SDX Energy and CNX Resources

-0.05

Correlation Coefficient

SDX Energy  CNX Resources

Good diversification

The 3 months correlation between SDX and CNX is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding SDX Energy plc and CNX Resources Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on CNX Resources Corp and SDX Energy 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 SDX Energy plc are associated (or correlated) with CNX Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of CNX Resources Corp has no effect on the direction of SDX Energy i.e., SDX Energy and CNX Resources go up and down completely randomly.

Pair Corralation between SDX Energy and CNX Resources

Assuming the 90 days horizon SDX Energy plc is expected to generate 11.44 times more return on investment than CNX Resources. However, SDX Energy is 11.44 times more volatile than CNX Resources Corp. It trades about 0.1 of its potential returns per unit of risk. CNX Resources Corp is currently generating about 0.23 per unit of risk. If you would invest  1.42  in SDX Energy plc on September 12, 2024 and sell it today you would lose (0.02) from holding SDX Energy plc or give up 1.41% of portfolio value over 90 days.

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

SDX Energy plc  vs.  CNX Resources Corp

SDX Energy plc

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in SDX Energy plc are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly unsteady technical and fundamental indicators, SDX Energy reported solid returns over the last few months and may actually be approaching a breakup point.

CNX Resources Corp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in CNX Resources Corp are ranked lower than 17 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unfluctuating basic indicators, CNX Resources showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with SDX Energy and CNX Resources

The main advantage of trading using opposite SDX Energy and CNX Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SDX Energy position performs unexpectedly, CNX Resources 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 CNX Resources will offset losses from the drop in CNX Resources' long position.

The idea behind SDX Energy plc and CNX Resources Corp 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.

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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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.