Correlation Between ETFS Coffee and Mineral Resources
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and Mineral Resources 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 Mineral Resources 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 Mineral Resources Limited, you can compare the effects of market volatilities on ETFS Coffee and Mineral Resources 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 Mineral Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and Mineral Resources.
Diversification Opportunities for ETFS Coffee and Mineral Resources
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ETFS and Mineral is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and Mineral Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mineral Resources 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 Mineral Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mineral Resources has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and Mineral Resources go up and down completely randomly.
Pair Corralation between ETFS Coffee and Mineral Resources
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 0.75 times more return on investment than Mineral Resources. However, ETFS Coffee ETC is 1.33 times less risky than Mineral Resources. It trades about 0.75 of its potential returns per unit of risk. Mineral Resources Limited is currently generating about -0.1 per unit of risk. If you would invest 3,741 in ETFS Coffee ETC on September 4, 2024 and sell it today you would earn a total of 1,518 from holding ETFS Coffee ETC or generate 40.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.24% |
| Values | Daily Returns |
ETFS Coffee ETC vs. Mineral Resources Limited
Performance |
| Timeline |
| ETFS Coffee ETC |
| Mineral Resources |
ETFS Coffee and Mineral Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and Mineral Resources
The main advantage of trading using opposite ETFS Coffee and Mineral Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, Mineral Resources 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 Mineral Resources will offset losses from the drop in Mineral Resources' long position.| ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
Other Complementary Tools
| Portfolio Suggestion Get suggestions outside of your existing asset allocation including your own model portfolios | |
| Sign In To Macroaxis Sign in to explore Macroaxis' wealth optimization platform and fintech modules | |
| Economic Indicators Top statistical indicators that provide insights into how an economy is performing | |
| FinTech Suite Use AI to screen and filter profitable investment opportunities | |
| Transaction History View history of all your transactions and understand their impact on performance |