Correlation Between ETFS Coffee and Shin Etsu
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and Shin Etsu 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 Shin Etsu 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 Shin Etsu Chemical Co, you can compare the effects of market volatilities on ETFS Coffee and Shin Etsu 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 Shin Etsu. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and Shin Etsu.
Diversification Opportunities for ETFS Coffee and Shin Etsu
-0.66 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between ETFS and Shin is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and Shin Etsu Chemical Co in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shin Etsu Chemical 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 Shin Etsu. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shin Etsu Chemical has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and Shin Etsu go up and down completely randomly.
Pair Corralation between ETFS Coffee and Shin Etsu
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 1.37 times more return on investment than Shin Etsu. However, ETFS Coffee is 1.37 times more volatile than Shin Etsu Chemical Co. It trades about 0.3 of its potential returns per unit of risk. Shin Etsu Chemical Co is currently generating about -0.05 per unit of risk. If you would invest 3,796 in ETFS Coffee ETC on November 1, 2024 and sell it today you would earn a total of 2,187 from holding ETFS Coffee ETC or generate 57.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 98.31% |
| Values | Daily Returns |
ETFS Coffee ETC vs. Shin Etsu Chemical Co
Performance |
| Timeline |
| ETFS Coffee ETC |
| Shin Etsu Chemical |
ETFS Coffee and Shin Etsu Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and Shin Etsu
The main advantage of trading using opposite ETFS Coffee and Shin Etsu positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, Shin Etsu 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 Shin Etsu will offset losses from the drop in Shin Etsu's long position.| ETFS Coffee vs. QBE Insurance Group | ETFS Coffee vs. Molson Coors Beverage | ETFS Coffee vs. Urban Outfitters | ETFS Coffee vs. China Resources Beer |
| Shin Etsu vs. AGNC INVESTMENT | Shin Etsu vs. United Insurance Holdings | Shin Etsu vs. Apollo Investment Corp | Shin Etsu vs. ScanSource |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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