Correlation Between ETFS Coffee and MEDICAL FACILITIES
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and MEDICAL FACILITIES 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 ETFS Coffee and MEDICAL FACILITIES into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between ETFS Coffee ETC and MEDICAL FACILITIES NEW, you can compare the effects of market volatilities on ETFS Coffee and MEDICAL FACILITIES 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 ETFS Coffee with a short position of MEDICAL FACILITIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and MEDICAL FACILITIES.
Diversification Opportunities for ETFS Coffee and MEDICAL FACILITIES
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ETFS and MEDICAL is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and MEDICAL FACILITIES NEW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MEDICAL FACILITIES NEW and ETFS Coffee 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 ETFS Coffee ETC are associated (or correlated) with MEDICAL FACILITIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MEDICAL FACILITIES NEW has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and MEDICAL FACILITIES go up and down completely randomly.
Pair Corralation between ETFS Coffee and MEDICAL FACILITIES
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 0.94 times more return on investment than MEDICAL FACILITIES. However, ETFS Coffee ETC is 1.06 times less risky than MEDICAL FACILITIES. It trades about 0.67 of its potential returns per unit of risk. MEDICAL FACILITIES NEW is currently generating about 0.26 per unit of risk. If you would invest 3,796 in ETFS Coffee ETC on September 2, 2024 and sell it today you would earn a total of 1,463 from holding ETFS Coffee ETC or generate 38.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
ETFS Coffee ETC vs. MEDICAL FACILITIES NEW
Performance |
| Timeline |
| ETFS Coffee ETC |
| MEDICAL FACILITIES NEW |
ETFS Coffee and MEDICAL FACILITIES Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and MEDICAL FACILITIES
The main advantage of trading using opposite ETFS Coffee and MEDICAL FACILITIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, MEDICAL FACILITIES 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 MEDICAL FACILITIES will offset losses from the drop in MEDICAL FACILITIES's long position.| ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc |
| MEDICAL FACILITIES vs. United States Steel | MEDICAL FACILITIES vs. CosmoSteel Holdings Limited | MEDICAL FACILITIES vs. Reliance Steel Aluminum | MEDICAL FACILITIES vs. Monster Beverage Corp |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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