Correlation Between ETFS Coffee and Western Copper
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and Western Copper 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 Western Copper 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 Western Copper and, you can compare the effects of market volatilities on ETFS Coffee and Western Copper 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 Western Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and Western Copper.
Diversification Opportunities for ETFS Coffee and Western Copper
-0.59 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ETFS and Western is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and Western Copper and in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Copper 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 Western Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Copper has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and Western Copper go up and down completely randomly.
Pair Corralation between ETFS Coffee and Western Copper
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 0.85 times more return on investment than Western Copper. However, ETFS Coffee ETC is 1.17 times less risky than Western Copper. It trades about 0.29 of its potential returns per unit of risk. Western Copper and is currently generating about -0.03 per unit of risk. If you would invest 3,908 in ETFS Coffee ETC on November 6, 2024 and sell it today you would earn a total of 2,201 from holding ETFS Coffee ETC or generate 56.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 98.31% |
| Values | Daily Returns |
ETFS Coffee ETC vs. Western Copper and
Performance |
| Timeline |
| ETFS Coffee ETC |
| Western Copper |
ETFS Coffee and Western Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and Western Copper
The main advantage of trading using opposite ETFS Coffee and Western Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, Western Copper 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 Western Copper will offset losses from the drop in Western Copper's long position.| ETFS Coffee vs. LG Display Co | ETFS Coffee vs. CyberArk Software | ETFS Coffee vs. Playtech plc | ETFS Coffee vs. VITEC SOFTWARE GROUP |
| Western Copper vs. ON SEMICONDUCTOR | Western Copper vs. TOREX SEMICONDUCTOR LTD | Western Copper vs. FLOW TRADERS LTD | Western Copper vs. Siamgas And Petrochemicals |
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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