Correlation Between VARIOUS EATERIES and Coffee Holding
Can any of the company-specific risk be diversified away by investing in both VARIOUS EATERIES 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 VARIOUS EATERIES and Coffee Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between VARIOUS EATERIES LS and Coffee Holding Co, you can compare the effects of market volatilities on VARIOUS EATERIES 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 VARIOUS EATERIES with a short position of Coffee Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of VARIOUS EATERIES and Coffee Holding.
Diversification Opportunities for VARIOUS EATERIES and Coffee Holding
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between VARIOUS and Coffee is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding VARIOUS EATERIES LS and Coffee Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coffee Holding and VARIOUS EATERIES 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 VARIOUS EATERIES LS 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 VARIOUS EATERIES i.e., VARIOUS EATERIES and Coffee Holding go up and down completely randomly.
Pair Corralation between VARIOUS EATERIES and Coffee Holding
Assuming the 90 days horizon VARIOUS EATERIES LS is expected to generate 0.35 times more return on investment than Coffee Holding. However, VARIOUS EATERIES LS is 2.84 times less risky than Coffee Holding. It trades about -0.37 of its potential returns per unit of risk. Coffee Holding Co is currently generating about -0.15 per unit of risk. If you would invest 20.00 in VARIOUS EATERIES LS on October 16, 2024 and sell it today you would lose (2.00) from holding VARIOUS EATERIES LS or give up 10.0% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
VARIOUS EATERIES LS vs. Coffee Holding Co
Performance |
| Timeline |
| VARIOUS EATERIES |
| Coffee Holding |
VARIOUS EATERIES and Coffee Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with VARIOUS EATERIES and Coffee Holding
The main advantage of trading using opposite VARIOUS EATERIES and Coffee Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if VARIOUS EATERIES 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.| VARIOUS EATERIES vs. WT OFFSHORE | VARIOUS EATERIES vs. Hochschild Mining plc | VARIOUS EATERIES vs. Eidesvik Offshore ASA | VARIOUS EATERIES vs. EIDESVIK OFFSHORE NK |
| Coffee Holding vs. FIREWEED METALS P | Coffee Holding vs. GALENA MINING LTD | Coffee Holding vs. GBS Software AG | Coffee Holding vs. MCEWEN MINING INC |
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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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