Correlation Between Hallador Energy and Peabody Energy
Can any of the company-specific risk be diversified away by investing in both Hallador Energy and Peabody 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 Hallador Energy and Peabody Energy into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hallador Energy and Peabody Energy Corp, you can compare the effects of market volatilities on Hallador Energy and Peabody 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 Hallador Energy with a short position of Peabody Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hallador Energy and Peabody Energy.
Diversification Opportunities for Hallador Energy and Peabody Energy
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Hallador and Peabody is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Hallador Energy and Peabody Energy Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Peabody Energy Corp and Hallador 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 Hallador Energy are associated (or correlated) with Peabody Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Peabody Energy Corp has no effect on the direction of Hallador Energy i.e., Hallador Energy and Peabody Energy go up and down completely randomly.
Pair Corralation between Hallador Energy and Peabody Energy
Given the investment horizon of 90 days Hallador Energy is expected to generate 2.01 times more return on investment than Peabody Energy. However, Hallador Energy is 2.01 times more volatile than Peabody Energy Corp. It trades about 0.13 of its potential returns per unit of risk. Peabody Energy Corp is currently generating about -0.06 per unit of risk. If you would invest 480.00 in Hallador Energy on January 30, 2024 and sell it today you would earn a total of 37.00 from holding Hallador Energy or generate 7.71% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Significant |
Accuracy | 100.0% |
Values | Daily Returns |
Hallador Energy vs. Peabody Energy Corp
Performance |
Timeline |
Hallador Energy |
Peabody Energy Corp |
Hallador Energy and Peabody Energy Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Hallador Energy and Peabody Energy
The main advantage of trading using opposite Hallador Energy and Peabody Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hallador Energy position performs unexpectedly, Peabody 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 Peabody Energy will offset losses from the drop in Peabody Energy's long position.Hallador Energy vs. Natural Resource Partners | Hallador Energy vs. Consol Energy | Hallador Energy vs. Adaro Energy Tbk | Hallador Energy vs. Alliance Resource Partners |
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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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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