Correlation Between ETFS Coffee and Molson Coors
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and Molson Coors 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 Molson Coors 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 Molson Coors Beverage, you can compare the effects of market volatilities on ETFS Coffee and Molson Coors 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 Molson Coors. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and Molson Coors.
Diversification Opportunities for ETFS Coffee and Molson Coors
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETFS and Molson is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and Molson Coors Beverage in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Molson Coors Beverage 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 Molson Coors. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Molson Coors Beverage has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and Molson Coors go up and down completely randomly.
Pair Corralation between ETFS Coffee and Molson Coors
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 1.06 times more return on investment than Molson Coors. However, ETFS Coffee is 1.06 times more volatile than Molson Coors Beverage. It trades about 0.48 of its potential returns per unit of risk. Molson Coors Beverage is currently generating about 0.22 per unit of risk. If you would invest 3,861 in ETFS Coffee ETC on August 28, 2024 and sell it today you would earn a total of 1,054 from holding ETFS Coffee ETC or generate 27.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 90.91% |
| Values | Daily Returns |
ETFS Coffee ETC vs. Molson Coors Beverage
Performance |
| Timeline |
| ETFS Coffee ETC |
| Molson Coors Beverage |
ETFS Coffee and Molson Coors Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and Molson Coors
The main advantage of trading using opposite ETFS Coffee and Molson Coors positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, Molson Coors 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 Molson Coors will offset losses from the drop in Molson Coors' long position.| ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc |
| Molson Coors vs. Universal Display | Molson Coors vs. Gamma Communications plc | Molson Coors vs. MI Homes | Molson Coors vs. CENTURIA OFFICE REIT |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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