Correlation Between ETFS Coffee and Coffee Holding
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and Coffee Holding 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 ETFS Coffee and Coffee Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETFS Coffee ETC and Coffee Holding Co, you can compare the effects of market volatilities on ETFS Coffee and Coffee Holding 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 ETFS Coffee with a short position of Coffee Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and Coffee Holding.
Diversification Opportunities for ETFS Coffee and Coffee Holding
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ETFS and Coffee is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and Coffee Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coffee Holding and ETFS Coffee 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 ETFS Coffee ETC are associated (or correlated) with Coffee Holding. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Coffee Holding has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and Coffee Holding go up and down completely randomly.
Pair Corralation between ETFS Coffee and Coffee Holding
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 0.61 times more return on investment than Coffee Holding. However, ETFS Coffee ETC is 1.65 times less risky than Coffee Holding. It trades about 0.12 of its potential returns per unit of risk. Coffee Holding Co is currently generating about 0.07 per unit of risk. If you would invest 4,915 in ETFS Coffee ETC on September 26, 2024 and sell it today you would earn a total of 364.00 from holding ETFS Coffee ETC or generate 7.41% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
ETFS Coffee ETC vs. Coffee Holding Co
Performance |
Timeline |
ETFS Coffee ETC |
Coffee Holding |
ETFS Coffee and Coffee Holding Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with ETFS Coffee and Coffee Holding
The main advantage of trading using opposite ETFS Coffee and Coffee Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, Coffee Holding 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 Coffee Holding will offset losses from the drop in Coffee Holding's long position.ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc |
Coffee Holding vs. Mowi ASA | Coffee Holding vs. LEROY SEAFOOD GRUNSPADR | Coffee Holding vs. Lery Seafood Group | Coffee Holding vs. Nisshin Seifun Group |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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