Correlation Between ETFS Coffee and American Eagle
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and American Eagle 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 American Eagle 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 American Eagle Outfitters, you can compare the effects of market volatilities on ETFS Coffee and American Eagle 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 American Eagle. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and American Eagle.
Diversification Opportunities for ETFS Coffee and American Eagle
-0.63 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ETFS and American is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and American Eagle Outfitters in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Eagle Outfitters 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 American Eagle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Eagle Outfitters has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and American Eagle go up and down completely randomly.
Pair Corralation between ETFS Coffee and American Eagle
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 0.95 times more return on investment than American Eagle. However, ETFS Coffee ETC is 1.05 times less risky than American Eagle. It trades about 0.2 of its potential returns per unit of risk. American Eagle Outfitters is currently generating about -0.03 per unit of risk. If you would invest 3,372 in ETFS Coffee ETC on November 3, 2024 and sell it today you would earn a total of 2,611 from holding ETFS Coffee ETC or generate 77.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 97.6% |
| Values | Daily Returns |
ETFS Coffee ETC vs. American Eagle Outfitters
Performance |
| Timeline |
| ETFS Coffee ETC |
| American Eagle Outfitters |
ETFS Coffee and American Eagle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and American Eagle
The main advantage of trading using opposite ETFS Coffee and American Eagle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, American Eagle 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 American Eagle will offset losses from the drop in American Eagle's long position.| ETFS Coffee vs. Summit Hotel Properties | ETFS Coffee vs. Daito Trust Construction | ETFS Coffee vs. DALATA HOTEL | ETFS Coffee vs. ALEFARM BREWING DK 05 |
| American Eagle vs. FIH MOBILE | American Eagle vs. Iridium Communications | American Eagle vs. Zoom Video Communications | American Eagle vs. Singapore Telecommunications Limited |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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