Correlation Between ETFS Coffee and Japan Medical
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and Japan Medical 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 Japan Medical 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 Japan Medical Dynamic, you can compare the effects of market volatilities on ETFS Coffee and Japan Medical 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 Japan Medical. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and Japan Medical.
Diversification Opportunities for ETFS Coffee and Japan Medical
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ETFS and Japan is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and Japan Medical Dynamic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Japan Medical Dynamic 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 Japan Medical. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Japan Medical Dynamic has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and Japan Medical go up and down completely randomly.
Pair Corralation between ETFS Coffee and Japan Medical
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 1.27 times more return on investment than Japan Medical. However, ETFS Coffee is 1.27 times more volatile than Japan Medical Dynamic. It trades about 0.16 of its potential returns per unit of risk. Japan Medical Dynamic is currently generating about 0.03 per unit of risk. If you would invest 3,464 in ETFS Coffee ETC on September 3, 2024 and sell it today you would earn a total of 1,795 from holding ETFS Coffee ETC or generate 51.82% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.9% |
| Values | Daily Returns |
ETFS Coffee ETC vs. Japan Medical Dynamic
Performance |
| Timeline |
| ETFS Coffee ETC |
| Japan Medical Dynamic |
ETFS Coffee and Japan Medical Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and Japan Medical
The main advantage of trading using opposite ETFS Coffee and Japan Medical positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, Japan Medical 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 Japan Medical will offset losses from the drop in Japan Medical's long position.| ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc |
| Japan Medical vs. Stryker | Japan Medical vs. Insulet | Japan Medical vs. Superior Plus Corp | Japan Medical vs. NMI Holdings |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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