Correlation Between ELL ENVIRONHLDGS and Coffee Holding
Can any of the company-specific risk be diversified away by investing in both ELL ENVIRONHLDGS 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 ELL ENVIRONHLDGS and Coffee Holding into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ELL ENVIRONHLDGS HD 0001 and Coffee Holding Co, you can compare the effects of market volatilities on ELL ENVIRONHLDGS 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 ELL ENVIRONHLDGS with a short position of Coffee Holding. Check out your portfolio center. Please also check ongoing floating volatility patterns of ELL ENVIRONHLDGS and Coffee Holding.
Diversification Opportunities for ELL ENVIRONHLDGS and Coffee Holding
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ELL and Coffee is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding ELL ENVIRONHLDGS HD 0001 and Coffee Holding Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Coffee Holding and ELL ENVIRONHLDGS 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 ELL ENVIRONHLDGS HD 0001 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 ELL ENVIRONHLDGS i.e., ELL ENVIRONHLDGS and Coffee Holding go up and down completely randomly.
Pair Corralation between ELL ENVIRONHLDGS and Coffee Holding
Assuming the 90 days horizon ELL ENVIRONHLDGS HD 0001 is expected to under-perform the Coffee Holding. But the stock apears to be less risky and, when comparing its historical volatility, ELL ENVIRONHLDGS HD 0001 is 1.65 times less risky than Coffee Holding. The stock trades about -0.21 of its potential returns per unit of risk. The Coffee Holding Co is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 366.00 in Coffee Holding Co on October 25, 2024 and sell it today you would lose (2.00) from holding Coffee Holding Co or give up 0.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ELL ENVIRONHLDGS HD 0001 vs. Coffee Holding Co
Performance |
| Timeline |
| ELL ENVIRONHLDGS |
| Coffee Holding |
ELL ENVIRONHLDGS and Coffee Holding Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ELL ENVIRONHLDGS and Coffee Holding
The main advantage of trading using opposite ELL ENVIRONHLDGS and Coffee Holding positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ELL ENVIRONHLDGS 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.| ELL ENVIRONHLDGS vs. FAST RETAIL ADR | ELL ENVIRONHLDGS vs. Canon Marketing Japan | ELL ENVIRONHLDGS vs. TRADEDOUBLER AB SK | ELL ENVIRONHLDGS vs. Tradegate AG Wertpapierhandelsbank |
| Coffee Holding vs. National Beverage Corp | Coffee Holding vs. American Airlines Group | Coffee Holding vs. The Boston Beer | Coffee Holding vs. United Airlines Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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