Correlation Between ETFS Coffee and Option Care
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and Option Care 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 Option Care 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 Option Care Health, you can compare the effects of market volatilities on ETFS Coffee and Option Care 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 Option Care. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and Option Care.
Diversification Opportunities for ETFS Coffee and Option Care
-0.56 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ETFS and Option is -0.56. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and Option Care Health in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Option Care Health 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 Option Care. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Option Care Health has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and Option Care go up and down completely randomly.
Pair Corralation between ETFS Coffee and Option Care
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 1.72 times more return on investment than Option Care. However, ETFS Coffee is 1.72 times more volatile than Option Care Health. It trades about 0.32 of its potential returns per unit of risk. Option Care Health is currently generating about 0.13 per unit of risk. If you would invest 4,167 in ETFS Coffee ETC on September 14, 2024 and sell it today you would earn a total of 1,072 from holding ETFS Coffee ETC or generate 25.73% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
ETFS Coffee ETC vs. Option Care Health
Performance |
| Timeline |
| ETFS Coffee ETC |
| Option Care Health |
ETFS Coffee and Option Care Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and Option Care
The main advantage of trading using opposite ETFS Coffee and Option Care positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, Option Care 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 Option Care will offset losses from the drop in Option Care's long position.| ETFS Coffee vs. BW OFFSHORE LTD | ETFS Coffee vs. AM EAGLE OUTFITTERS | ETFS Coffee vs. Ramsay Health Care | ETFS Coffee vs. ATRYS HEALTH SA |
| Option Care vs. JD HEALTH INTL | Option Care vs. Fresenius SE Co | Option Care vs. Fresenius Medical Care | Option Care vs. Sonic Healthcare Limited |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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