Correlation Between ETFS Coffee and DAIRY FARM
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and DAIRY FARM 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 DAIRY FARM 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 DAIRY FARM INTL, you can compare the effects of market volatilities on ETFS Coffee and DAIRY FARM 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 DAIRY FARM. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and DAIRY FARM.
Diversification Opportunities for ETFS Coffee and DAIRY FARM
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETFS and DAIRY is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and DAIRY FARM INTL in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on DAIRY FARM INTL 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 DAIRY FARM. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of DAIRY FARM INTL has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and DAIRY FARM go up and down completely randomly.
Pair Corralation between ETFS Coffee and DAIRY FARM
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 1.88 times more return on investment than DAIRY FARM. However, ETFS Coffee is 1.88 times more volatile than DAIRY FARM INTL. It trades about 0.32 of its potential returns per unit of risk. DAIRY FARM INTL is currently generating about -0.01 per unit of risk. If you would invest 4,131 in ETFS Coffee ETC on September 13, 2024 and sell it today you would earn a total of 1,108 from holding ETFS Coffee ETC or generate 26.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
ETFS Coffee ETC vs. DAIRY FARM INTL
Performance |
| Timeline |
| ETFS Coffee ETC |
| DAIRY FARM INTL |
ETFS Coffee and DAIRY FARM Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and DAIRY FARM
The main advantage of trading using opposite ETFS Coffee and DAIRY FARM positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, DAIRY FARM 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 DAIRY FARM will offset losses from the drop in DAIRY FARM's long position.| ETFS Coffee vs. BW OFFSHORE LTD | ETFS Coffee vs. AM EAGLE OUTFITTERS | ETFS Coffee vs. Ramsay Health Care | ETFS Coffee vs. ATRYS HEALTH SA |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
Other Complementary Tools
| Idea Breakdown Analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data |