Correlation Between ETFS Coffee and KUBOTA CORP
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and KUBOTA CORP 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 KUBOTA CORP 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 KUBOTA P ADR20, you can compare the effects of market volatilities on ETFS Coffee and KUBOTA CORP 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 KUBOTA CORP. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and KUBOTA CORP.
Diversification Opportunities for ETFS Coffee and KUBOTA CORP
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ETFS and KUBOTA is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and KUBOTA P ADR20 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on KUBOTA P ADR20 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 KUBOTA CORP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of KUBOTA P ADR20 has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and KUBOTA CORP go up and down completely randomly.
Pair Corralation between ETFS Coffee and KUBOTA CORP
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 1.37 times more return on investment than KUBOTA CORP. However, ETFS Coffee is 1.37 times more volatile than KUBOTA P ADR20. It trades about 0.17 of its potential returns per unit of risk. KUBOTA P ADR20 is currently generating about -0.08 per unit of risk. If you would invest 3,035 in ETFS Coffee ETC on September 3, 2024 and sell it today you would earn a total of 2,224 from holding ETFS Coffee ETC or generate 73.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 96.69% |
| Values | Daily Returns |
ETFS Coffee ETC vs. KUBOTA P ADR20
Performance |
| Timeline |
| ETFS Coffee ETC |
| KUBOTA P ADR20 |
ETFS Coffee and KUBOTA CORP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and KUBOTA CORP
The main advantage of trading using opposite ETFS Coffee and KUBOTA CORP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, KUBOTA CORP 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 KUBOTA CORP will offset losses from the drop in KUBOTA CORP's long position.| ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc |
| KUBOTA CORP vs. Citic Telecom International | KUBOTA CORP vs. Entravision Communications | KUBOTA CORP vs. DICKS Sporting Goods | KUBOTA CORP vs. Transportadora de Gas |
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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.
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