Correlation Between ETFS Coffee and PPHE HOTEL
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and PPHE HOTEL 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 PPHE HOTEL 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 PPHE HOTEL GROUP, you can compare the effects of market volatilities on ETFS Coffee and PPHE HOTEL 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 PPHE HOTEL. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and PPHE HOTEL.
Diversification Opportunities for ETFS Coffee and PPHE HOTEL
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ETFS and PPHE is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and PPHE HOTEL GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on PPHE HOTEL GROUP 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 PPHE HOTEL. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of PPHE HOTEL GROUP has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and PPHE HOTEL go up and down completely randomly.
Pair Corralation between ETFS Coffee and PPHE HOTEL
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 1.01 times more return on investment than PPHE HOTEL. However, ETFS Coffee is 1.01 times more volatile than PPHE HOTEL GROUP. It trades about 0.25 of its potential returns per unit of risk. PPHE HOTEL GROUP is currently generating about -0.17 per unit of risk. If you would invest 5,346 in ETFS Coffee ETC on November 2, 2024 and sell it today you would earn a total of 637.00 from holding ETFS Coffee ETC or generate 11.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETFS Coffee ETC vs. PPHE HOTEL GROUP
Performance |
| Timeline |
| ETFS Coffee ETC |
| PPHE HOTEL GROUP |
ETFS Coffee and PPHE HOTEL Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and PPHE HOTEL
The main advantage of trading using opposite ETFS Coffee and PPHE HOTEL positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, PPHE HOTEL 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 PPHE HOTEL will offset losses from the drop in PPHE HOTEL's long position.| ETFS Coffee vs. QBE Insurance Group | ETFS Coffee vs. Molson Coors Beverage | ETFS Coffee vs. Urban Outfitters | ETFS Coffee vs. China Resources Beer |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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