Correlation Between H2O Retailing and ETFS Coffee
Can any of the company-specific risk be diversified away by investing in both H2O Retailing 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 H2O Retailing and ETFS Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between H2O Retailing and ETFS Coffee ETC, you can compare the effects of market volatilities on H2O Retailing 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 H2O Retailing with a short position of ETFS Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of H2O Retailing and ETFS Coffee.
Diversification Opportunities for H2O Retailing and ETFS Coffee
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between H2O and ETFS is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding H2O Retailing 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 H2O Retailing 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 H2O Retailing 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 H2O Retailing i.e., H2O Retailing and ETFS Coffee go up and down completely randomly.
Pair Corralation between H2O Retailing and ETFS Coffee
Assuming the 90 days horizon H2O Retailing is expected to generate 1.16 times more return on investment than ETFS Coffee. However, H2O Retailing is 1.16 times more volatile than ETFS Coffee ETC. It trades about 0.05 of its potential returns per unit of risk. ETFS Coffee ETC is currently generating about 0.02 per unit of risk. If you would invest 1,320 in H2O Retailing on October 19, 2024 and sell it today you would earn a total of 20.00 from holding H2O Retailing or generate 1.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 94.44% |
| Values | Daily Returns |
H2O Retailing vs. ETFS Coffee ETC
Performance |
| Timeline |
| H2O Retailing |
| ETFS Coffee ETC |
H2O Retailing and ETFS Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with H2O Retailing and ETFS Coffee
The main advantage of trading using opposite H2O Retailing and ETFS Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if H2O Retailing 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.| H2O Retailing vs. DAIRY FARM INTL | H2O Retailing vs. FARM 51 GROUP | H2O Retailing vs. MAVEN WIRELESS SWEDEN | H2O Retailing vs. Sumitomo Mitsui Construction |
| ETFS Coffee vs. CANON MARKETING JP | ETFS Coffee vs. Entravision Communications | ETFS Coffee vs. H2O Retailing | ETFS Coffee vs. TRADEDOUBLER AB SK |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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