Correlation Between ETFS Coffee and ROMERIKE SPAREBANK
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK NK, you can compare the effects of market volatilities on ETFS Coffee and ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and ROMERIKE SPAREBANK.
Diversification Opportunities for ETFS Coffee and ROMERIKE SPAREBANK
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ETFS and ROMERIKE is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and ROMERIKE SPAREBANK NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ROMERIKE SPAREBANK has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and ROMERIKE SPAREBANK go up and down completely randomly.
Pair Corralation between ETFS Coffee and ROMERIKE SPAREBANK
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 2.71 times more return on investment than ROMERIKE SPAREBANK. However, ETFS Coffee is 2.71 times more volatile than ROMERIKE SPAREBANK NK. It trades about 0.49 of its potential returns per unit of risk. ROMERIKE SPAREBANK NK is currently generating about 0.27 per unit of risk. If you would invest 3,861 in ETFS Coffee ETC on August 29, 2024 and sell it today you would earn a total of 1,068 from holding ETFS Coffee ETC or generate 27.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 90.91% |
| Values | Daily Returns |
ETFS Coffee ETC vs. ROMERIKE SPAREBANK NK
Performance |
| Timeline |
| ETFS Coffee ETC |
| ROMERIKE SPAREBANK |
ETFS Coffee and ROMERIKE SPAREBANK Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and ROMERIKE SPAREBANK
The main advantage of trading using opposite ETFS Coffee and ROMERIKE SPAREBANK positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, ROMERIKE SPAREBANK 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 ROMERIKE SPAREBANK will offset losses from the drop in ROMERIKE SPAREBANK'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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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