Correlation Between Vital Energy and CNX Resources

Can any of the company-specific risk be diversified away by investing in both Vital 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 Vital 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 Vital Energy and CNX Resources Corp, you can compare the effects of market volatilities on Vital 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 Vital Energy with a short position of CNX Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vital Energy and CNX Resources.

Diversification Opportunities for Vital Energy and CNX Resources

-0.36

Correlation Coefficient

Vital Energy  CNX Resources

Very good diversification

The 3 months correlation between Vital and CNX is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Vital Energy 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 Vital 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 Vital Energy 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 Vital Energy i.e., Vital Energy and CNX Resources go up and down completely randomly.

Pair Corralation between Vital Energy and CNX Resources

Given the investment horizon of 90 days Vital Energy is expected to generate 0.57 times more return on investment than CNX Resources. However, Vital Energy is 1.76 times less risky than CNX Resources. It trades about 0.44 of its potential returns per unit of risk. CNX Resources Corp is currently generating about -0.37 per unit of risk. If you would invest  2,942  in Vital Energy on October 27, 2024 and sell it today you would earn a total of  500.00  from holding Vital Energy or generate 17.0% return on investment over 90 days.

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

Vital Energy  vs.  CNX Resources Corp

Vital Energy

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Vital Energy are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather unfluctuating essential indicators, Vital Energy exhibited solid returns over the last few months and may actually be approaching a breakup point.

CNX Resources Corp

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Vital Energy and CNX Resources

The main advantage of trading using opposite Vital Energy and CNX Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vital 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 Vital Energy 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.