Correlation Between ETFS Coffee and Nufarm
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and Nufarm 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 Nufarm 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 Nufarm Limited, you can compare the effects of market volatilities on ETFS Coffee and Nufarm 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 Nufarm. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and Nufarm.
Diversification Opportunities for ETFS Coffee and Nufarm
-0.45 | Correlation Coefficient |
Very good diversification
The 3 months correlation between ETFS and Nufarm is -0.45. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and Nufarm Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Limited 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 Nufarm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm Limited has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and Nufarm go up and down completely randomly.
Pair Corralation between ETFS Coffee and Nufarm
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 1.5 times more return on investment than Nufarm. However, ETFS Coffee is 1.5 times more volatile than Nufarm Limited. It trades about 0.29 of its potential returns per unit of risk. Nufarm Limited is currently generating about 0.07 per unit of risk. If you would invest 5,250 in ETFS Coffee ETC on November 5, 2024 and sell it today you would earn a total of 738.00 from holding ETFS Coffee ETC or generate 14.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETFS Coffee ETC vs. Nufarm Limited
Performance |
| Timeline |
| ETFS Coffee ETC |
| Nufarm Limited |
ETFS Coffee and Nufarm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and Nufarm
The main advantage of trading using opposite ETFS Coffee and Nufarm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, Nufarm 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 Nufarm will offset losses from the drop in Nufarm's long position.| ETFS Coffee vs. Molson Coors Beverage | ETFS Coffee vs. ARDAGH METAL PACDL 0001 | ETFS Coffee vs. Transport International Holdings | ETFS Coffee vs. GREENX METALS LTD |
| Nufarm vs. PEPTONIC MEDICAL | Nufarm vs. MeVis Medical Solutions | Nufarm vs. ADRIATIC METALS LS 013355 | Nufarm vs. Nippon Light Metal |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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