Correlation Between ETFS Coffee and Federal Home
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and Federal Home 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 Federal Home 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 Federal Home Loan, you can compare the effects of market volatilities on ETFS Coffee and Federal Home 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 Federal Home. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and Federal Home.
Diversification Opportunities for ETFS Coffee and Federal Home
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETFS and Federal is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and Federal Home Loan in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federal Home Loan 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 Federal Home. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federal Home Loan has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and Federal Home go up and down completely randomly.
Pair Corralation between ETFS Coffee and Federal Home
Assuming the 90 days trading horizon ETFS Coffee is expected to generate 2.76 times less return on investment than Federal Home. But when comparing it to its historical volatility, ETFS Coffee ETC is 2.77 times less risky than Federal Home. It trades about 0.13 of its potential returns per unit of risk. Federal Home Loan is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 96.00 in Federal Home Loan on October 29, 2024 and sell it today you would earn a total of 384.00 from holding Federal Home Loan or generate 400.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.6% |
| Values | Daily Returns |
ETFS Coffee ETC vs. Federal Home Loan
Performance |
| Timeline |
| ETFS Coffee ETC |
| Federal Home Loan |
ETFS Coffee and Federal Home Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and Federal Home
The main advantage of trading using opposite ETFS Coffee and Federal Home positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, Federal Home 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 Federal Home will offset losses from the drop in Federal Home's long position.| ETFS Coffee vs. Easy Software AG | ETFS Coffee vs. PENN Entertainment | ETFS Coffee vs. AECOM TECHNOLOGY | ETFS Coffee vs. Casio Computer CoLtd |
| Federal Home vs. SANOK RUBBER ZY | Federal Home vs. INFORMATION SVC GRP | Federal Home vs. The Yokohama Rubber | Federal Home vs. CN DATANG C |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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