Correlation Between ETFS Coffee and Amazon
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and Amazon 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 Amazon 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 Amazon Inc, you can compare the effects of market volatilities on ETFS Coffee and Amazon 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 Amazon. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and Amazon.
Diversification Opportunities for ETFS Coffee and Amazon
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETFS and Amazon is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and Amazon Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amazon Inc 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 Amazon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amazon Inc has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and Amazon go up and down completely randomly.
Pair Corralation between ETFS Coffee and Amazon
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 1.73 times more return on investment than Amazon. However, ETFS Coffee is 1.73 times more volatile than Amazon Inc. It trades about 0.1 of its potential returns per unit of risk. Amazon Inc is currently generating about -0.24 per unit of risk. If you would invest 5,269 in ETFS Coffee ETC on October 17, 2024 and sell it today you would earn a total of 160.00 from holding ETFS Coffee ETC or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
ETFS Coffee ETC vs. Amazon Inc
Performance |
| Timeline |
| ETFS Coffee ETC |
| Amazon Inc |
ETFS Coffee and Amazon Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and Amazon
The main advantage of trading using opposite ETFS Coffee and Amazon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, Amazon 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 Amazon will offset losses from the drop in Amazon's long position.| ETFS Coffee vs. TRAVEL LEISURE DL 01 | ETFS Coffee vs. InPlay Oil Corp | ETFS Coffee vs. Easy Software AG | ETFS Coffee vs. Constellation Software |
| Amazon vs. Tyson Foods | Amazon vs. EIDESVIK OFFSHORE NK | Amazon vs. PT Wintermar Offshore | Amazon vs. Nomad Foods |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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