Correlation Between ETFS Coffee and Fuji Media
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and Fuji Media 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 Fuji Media 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 Fuji Media Holdings, you can compare the effects of market volatilities on ETFS Coffee and Fuji Media 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 Fuji Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and Fuji Media.
Diversification Opportunities for ETFS Coffee and Fuji Media
0.19 | Correlation Coefficient |
Average diversification
The 3 months correlation between ETFS and Fuji is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and Fuji Media Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fuji Media Holdings 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 Fuji Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fuji Media Holdings has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and Fuji Media go up and down completely randomly.
Pair Corralation between ETFS Coffee and Fuji Media
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 1.79 times more return on investment than Fuji Media. However, ETFS Coffee is 1.79 times more volatile than Fuji Media Holdings. It trades about 0.32 of its potential returns per unit of risk. Fuji Media Holdings is currently generating about 0.07 per unit of risk. If you would invest 3,918 in ETFS Coffee ETC on September 13, 2024 and sell it today you would earn a total of 1,624 from holding ETFS Coffee ETC or generate 41.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.35% |
| Values | Daily Returns |
ETFS Coffee ETC vs. Fuji Media Holdings
Performance |
| Timeline |
| ETFS Coffee ETC |
| Fuji Media Holdings |
ETFS Coffee and Fuji Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and Fuji Media
The main advantage of trading using opposite ETFS Coffee and Fuji Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, Fuji Media 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 Fuji Media will offset losses from the drop in Fuji Media's long position.| ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc |
| Fuji Media vs. ELMOS SEMICONDUCTOR | Fuji Media vs. CVR Medical Corp | Fuji Media vs. ETFS Coffee ETC | Fuji Media vs. Zoom Video Communications |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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