Correlation Between Cars and ETFS Coffee
Can any of the company-specific risk be diversified away by investing in both Cars and ETFS Coffee 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 Cars and ETFS Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Cars Inc and ETFS Coffee ETC, you can compare the effects of market volatilities on Cars and ETFS Coffee 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 Cars with a short position of ETFS Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cars and ETFS Coffee.
Diversification Opportunities for Cars and ETFS Coffee
-0.29 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Cars and ETFS is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding Cars Inc and ETFS Coffee ETC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Coffee ETC and Cars 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 Cars Inc are associated (or correlated) with ETFS Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Coffee ETC has no effect on the direction of Cars i.e., Cars and ETFS Coffee go up and down completely randomly.
Pair Corralation between Cars and ETFS Coffee
Assuming the 90 days horizon Cars is expected to generate 1.94 times less return on investment than ETFS Coffee. In addition to that, Cars is 1.32 times more volatile than ETFS Coffee ETC. It trades about 0.13 of its total potential returns per unit of risk. ETFS Coffee ETC is currently generating about 0.34 per unit of volatility. If you would invest 5,250 in ETFS Coffee ETC on November 7, 2024 and sell it today you would earn a total of 859.00 from holding ETFS Coffee ETC or generate 16.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Cars Inc vs. ETFS Coffee ETC
Performance |
| Timeline |
| Cars Inc |
| ETFS Coffee ETC |
Cars and ETFS Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Cars and ETFS Coffee
The main advantage of trading using opposite Cars and ETFS Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cars position performs unexpectedly, ETFS Coffee 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 ETFS Coffee will offset losses from the drop in ETFS Coffee's long position.| Cars vs. SWISS WATER DECAFFCOFFEE | Cars vs. Singapore Telecommunications Limited | Cars vs. Lattice Semiconductor | Cars vs. TOREX SEMICONDUCTOR LTD |
| ETFS Coffee vs. Fukuyama Transporting Co | ETFS Coffee vs. ANTA SPORTS PRODUCT | ETFS Coffee vs. TITANIUM TRANSPORTGROUP | ETFS Coffee vs. COLUMBIA SPORTSWEAR |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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