Correlation Between EIDESVIK OFFSHORE and ETFS Coffee
Can any of the company-specific risk be diversified away by investing in both EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE and ETFS Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between EIDESVIK OFFSHORE NK and ETFS Coffee ETC, you can compare the effects of market volatilities on EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE with a short position of ETFS Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of EIDESVIK OFFSHORE and ETFS Coffee.
Diversification Opportunities for EIDESVIK OFFSHORE and ETFS Coffee
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between EIDESVIK and ETFS is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding EIDESVIK OFFSHORE NK 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 EIDESVIK OFFSHORE 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 EIDESVIK OFFSHORE NK 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 EIDESVIK OFFSHORE i.e., EIDESVIK OFFSHORE and ETFS Coffee go up and down completely randomly.
Pair Corralation between EIDESVIK OFFSHORE and ETFS Coffee
Assuming the 90 days horizon EIDESVIK OFFSHORE is expected to generate 13.15 times less return on investment than ETFS Coffee. But when comparing it to its historical volatility, EIDESVIK OFFSHORE NK is 1.76 times less risky than ETFS Coffee. It trades about 0.06 of its potential returns per unit of risk. ETFS Coffee ETC is currently generating about 0.47 of returns per unit of risk over similar time horizon. If you would invest 3,861 in ETFS Coffee ETC on August 29, 2024 and sell it today you would earn a total of 1,068 from holding ETFS Coffee ETC or generate 27.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
EIDESVIK OFFSHORE NK vs. ETFS Coffee ETC
Performance |
| Timeline |
| EIDESVIK OFFSHORE |
| ETFS Coffee ETC |
EIDESVIK OFFSHORE and ETFS Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with EIDESVIK OFFSHORE and ETFS Coffee
The main advantage of trading using opposite EIDESVIK OFFSHORE and ETFS Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if EIDESVIK OFFSHORE 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.| EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc | EIDESVIK OFFSHORE vs. Apple Inc |
| ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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