Correlation Between ETFS Coffee and Grupo Aval
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and Grupo Aval 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 Grupo Aval 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 Grupo Aval Acciones, you can compare the effects of market volatilities on ETFS Coffee and Grupo Aval 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 Grupo Aval. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and Grupo Aval.
Diversification Opportunities for ETFS Coffee and Grupo Aval
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETFS and Grupo is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and Grupo Aval Acciones in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Grupo Aval Acciones 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 Grupo Aval. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Grupo Aval Acciones has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and Grupo Aval go up and down completely randomly.
Pair Corralation between ETFS Coffee and Grupo Aval
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 25.18 times more return on investment than Grupo Aval. However, ETFS Coffee is 25.18 times more volatile than Grupo Aval Acciones. It trades about 0.06 of its potential returns per unit of risk. Grupo Aval Acciones is currently generating about 0.01 per unit of risk. If you would invest 112.00 in ETFS Coffee ETC on September 2, 2024 and sell it today you would earn a total of 5,147 from holding ETFS Coffee ETC or generate 4595.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.42% |
| Values | Daily Returns |
ETFS Coffee ETC vs. Grupo Aval Acciones
Performance |
| Timeline |
| ETFS Coffee ETC |
| Grupo Aval Acciones |
ETFS Coffee and Grupo Aval Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and Grupo Aval
The main advantage of trading using opposite ETFS Coffee and Grupo Aval positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, Grupo Aval 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 Grupo Aval will offset losses from the drop in Grupo Aval's long position.| ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc |
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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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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