Correlation Between ETFS Coffee and SEI INVESTMENTS
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and SEI INVESTMENTS 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 SEI INVESTMENTS 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 SEI INVESTMENTS, you can compare the effects of market volatilities on ETFS Coffee and SEI INVESTMENTS 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 SEI INVESTMENTS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and SEI INVESTMENTS.
Diversification Opportunities for ETFS Coffee and SEI INVESTMENTS
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETFS and SEI is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and SEI INVESTMENTS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SEI INVESTMENTS 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 SEI INVESTMENTS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SEI INVESTMENTS has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and SEI INVESTMENTS go up and down completely randomly.
Pair Corralation between ETFS Coffee and SEI INVESTMENTS
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 2.08 times more return on investment than SEI INVESTMENTS. However, ETFS Coffee is 2.08 times more volatile than SEI INVESTMENTS. It trades about 0.17 of its potential returns per unit of risk. SEI INVESTMENTS is currently generating about 0.14 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 Together |
| Strength | Significant |
| Accuracy | 96.69% |
| Values | Daily Returns |
ETFS Coffee ETC vs. SEI INVESTMENTS
Performance |
| Timeline |
| ETFS Coffee ETC |
| SEI INVESTMENTS |
ETFS Coffee and SEI INVESTMENTS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and SEI INVESTMENTS
The main advantage of trading using opposite ETFS Coffee and SEI INVESTMENTS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, SEI INVESTMENTS 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 SEI INVESTMENTS will offset losses from the drop in SEI INVESTMENTS's long position.| ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc |
| SEI INVESTMENTS vs. TIANDE CHEMICAL | SEI INVESTMENTS vs. CHEMICAL INDUSTRIES | SEI INVESTMENTS vs. Grupo Carso SAB | SEI INVESTMENTS vs. GRUPO CARSO A1 |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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