Correlation Between ETFS Coffee and FuelCell Energy
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and FuelCell Energy 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 FuelCell Energy 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 FuelCell Energy, you can compare the effects of market volatilities on ETFS Coffee and FuelCell Energy 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 FuelCell Energy. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and FuelCell Energy.
Diversification Opportunities for ETFS Coffee and FuelCell Energy
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ETFS and FuelCell is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and FuelCell Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on FuelCell Energy 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 FuelCell Energy. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of FuelCell Energy has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and FuelCell Energy go up and down completely randomly.
Pair Corralation between ETFS Coffee and FuelCell Energy
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 7.11 times more return on investment than FuelCell Energy. However, ETFS Coffee is 7.11 times more volatile than FuelCell Energy. It trades about 0.05 of its potential returns per unit of risk. FuelCell Energy is currently generating about -0.04 per unit of risk. If you would invest 101.00 in ETFS Coffee ETC on October 30, 2024 and sell it today you would earn a total of 5,597 from holding ETFS Coffee ETC or generate 5541.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.99% |
| Values | Daily Returns |
ETFS Coffee ETC vs. FuelCell Energy
Performance |
| Timeline |
| ETFS Coffee ETC |
| FuelCell Energy |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
OK
ETFS Coffee and FuelCell Energy Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and FuelCell Energy
The main advantage of trading using opposite ETFS Coffee and FuelCell Energy positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, FuelCell Energy 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 FuelCell Energy will offset losses from the drop in FuelCell Energy's long position.| ETFS Coffee vs. GRUPO CARSO A1 | ETFS Coffee vs. Grupo Carso SAB | ETFS Coffee vs. Cars Inc | ETFS Coffee vs. Calibre Mining Corp |
| FuelCell Energy vs. Mitsui Chemicals | FuelCell Energy vs. China Resources Beer | FuelCell Energy vs. Thai Beverage Public | FuelCell Energy vs. Retail Estates NV |
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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