Correlation Between ETFS Coffee and Harmony Gold
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and Harmony Gold 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 Harmony Gold 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 Harmony Gold Mining, you can compare the effects of market volatilities on ETFS Coffee and Harmony Gold 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 Harmony Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and Harmony Gold.
Diversification Opportunities for ETFS Coffee and Harmony Gold
-0.34 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ETFS and Harmony is -0.34. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and Harmony Gold Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Harmony Gold Mining 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 Harmony Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Harmony Gold Mining has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and Harmony Gold go up and down completely randomly.
Pair Corralation between ETFS Coffee and Harmony Gold
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 0.75 times more return on investment than Harmony Gold. However, ETFS Coffee ETC is 1.34 times less risky than Harmony Gold. It trades about 0.22 of its potential returns per unit of risk. Harmony Gold Mining is currently generating about 0.07 per unit of risk. If you would invest 3,600 in ETFS Coffee ETC on November 2, 2024 and sell it today you would earn a total of 2,383 from holding ETFS Coffee ETC or generate 66.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 97.09% |
| Values | Daily Returns |
ETFS Coffee ETC vs. Harmony Gold Mining
Performance |
| Timeline |
| ETFS Coffee ETC |
| Harmony Gold Mining |
ETFS Coffee and Harmony Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and Harmony Gold
The main advantage of trading using opposite ETFS Coffee and Harmony Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, Harmony Gold 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 Harmony Gold will offset losses from the drop in Harmony Gold's long position.| ETFS Coffee vs. QBE Insurance Group | ETFS Coffee vs. Molson Coors Beverage | ETFS Coffee vs. Urban Outfitters | ETFS Coffee vs. China Resources Beer |
| Harmony Gold vs. Salesforce | Harmony Gold vs. Mitsubishi Materials | Harmony Gold vs. Applied Materials | Harmony Gold vs. Vulcan Materials |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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