Correlation Between ETFS Coffee and State Bank
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and State Bank 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 State Bank 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 State Bank of, you can compare the effects of market volatilities on ETFS Coffee and State Bank 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 State Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and State Bank.
Diversification Opportunities for ETFS Coffee and State Bank
0.36 | Correlation Coefficient |
Weak diversification
The 3 months correlation between ETFS and State is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank 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 State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and State Bank go up and down completely randomly.
Pair Corralation between ETFS Coffee and State Bank
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 0.96 times more return on investment than State Bank. However, ETFS Coffee ETC is 1.04 times less risky than State Bank. It trades about 0.23 of its potential returns per unit of risk. State Bank of is currently generating about 0.05 per unit of risk. If you would invest 4,030 in ETFS Coffee ETC on August 28, 2024 and sell it today you would earn a total of 899.00 from holding ETFS Coffee ETC or generate 22.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.35% |
| Values | Daily Returns |
ETFS Coffee ETC vs. State Bank of
Performance |
| Timeline |
| ETFS Coffee ETC |
| State Bank |
ETFS Coffee and State Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and State Bank
The main advantage of trading using opposite ETFS Coffee and State Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, State Bank 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 State Bank will offset losses from the drop in State Bank's long position.| ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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