Correlation Between Coffee Holding and Archer Daniels
Can any of the company-specific risk be diversified away by investing in both Coffee Holding and Archer Daniels 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 Coffee Holding and Archer Daniels into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Coffee Holding Co and Archer Daniels Midland, you can compare the effects of market volatilities on Coffee Holding and Archer Daniels 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 Coffee Holding with a short position of Archer Daniels. Check out your portfolio center. Please also check ongoing floating volatility patterns of Coffee Holding and Archer Daniels.
Diversification Opportunities for Coffee Holding and Archer Daniels
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Coffee and Archer is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Coffee Holding Co and Archer Daniels Midland in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Archer Daniels Midland and Coffee Holding 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 Coffee Holding Co are associated (or correlated) with Archer Daniels. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Archer Daniels Midland has no effect on the direction of Coffee Holding i.e., Coffee Holding and Archer Daniels go up and down completely randomly.
Pair Corralation between Coffee Holding and Archer Daniels
Considering the 90-day investment horizon Coffee Holding Co is expected to generate 2.04 times more return on investment than Archer Daniels. However, Coffee Holding is 2.04 times more volatile than Archer Daniels Midland. It trades about 0.15 of its potential returns per unit of risk. Archer Daniels Midland is currently generating about -0.17 per unit of risk. If you would invest 315.00 in Coffee Holding Co on August 27, 2024 and sell it today you would earn a total of 34.00 from holding Coffee Holding Co or generate 10.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Coffee Holding Co vs. Archer Daniels Midland
Performance |
| Timeline |
| Coffee Holding |
| Archer Daniels Midland |
Coffee Holding and Archer Daniels Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Coffee Holding and Archer Daniels
The main advantage of trading using opposite Coffee Holding and Archer Daniels positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Coffee Holding position performs unexpectedly, Archer Daniels 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 Archer Daniels will offset losses from the drop in Archer Daniels' long position.| Coffee Holding vs. Seneca Foods Corp | Coffee Holding vs. J J Snack | Coffee Holding vs. Aryzta AG PK | Coffee Holding vs. Lifeway Foods |
| Archer Daniels vs. Adecoagro SA | Archer Daniels vs. Cal Maine Foods | Archer Daniels vs. Tyson Foods | Archer Daniels vs. Fresh Del Monte |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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