Correlation Between ETFS Coffee and FARM 51
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and FARM 51 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 FARM 51 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 FARM 51 GROUP, you can compare the effects of market volatilities on ETFS Coffee and FARM 51 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 FARM 51. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and FARM 51.
Diversification Opportunities for ETFS Coffee and FARM 51
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ETFS and FARM is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and FARM 51 GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FARM 51 GROUP 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 FARM 51. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FARM 51 GROUP has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and FARM 51 go up and down completely randomly.
Pair Corralation between ETFS Coffee and FARM 51
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 14.61 times more return on investment than FARM 51. However, ETFS Coffee is 14.61 times more volatile than FARM 51 GROUP. It trades about 0.05 of its potential returns per unit of risk. FARM 51 GROUP is currently generating about -0.03 per unit of risk. If you would invest 100.00 in ETFS Coffee ETC on October 26, 2024 and sell it today you would earn a total of 5,463 from holding ETFS Coffee ETC or generate 5463.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 99.0% |
| Values | Daily Returns |
ETFS Coffee ETC vs. FARM 51 GROUP
Performance |
| Timeline |
| ETFS Coffee ETC |
| FARM 51 GROUP |
ETFS Coffee and FARM 51 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and FARM 51
The main advantage of trading using opposite ETFS Coffee and FARM 51 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, FARM 51 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 FARM 51 will offset losses from the drop in FARM 51's long position.| ETFS Coffee vs. Vulcan Materials | ETFS Coffee vs. T MOBILE US | ETFS Coffee vs. Summit Materials | ETFS Coffee vs. The Yokohama Rubber |
| FARM 51 vs. GEAR4MUSIC LS 10 | FARM 51 vs. BANKINTER ADR 2007 | FARM 51 vs. Check Point Software | FARM 51 vs. Kingdee International Software |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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