Correlation Between ETFS Coffee and SOLSTAD OFFSHORE
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE NK, you can compare the effects of market volatilities on ETFS Coffee and SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and SOLSTAD OFFSHORE.
Diversification Opportunities for ETFS Coffee and SOLSTAD OFFSHORE
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETFS and SOLSTAD is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and SOLSTAD OFFSHORE NK in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of SOLSTAD OFFSHORE has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and SOLSTAD OFFSHORE go up and down completely randomly.
Pair Corralation between ETFS Coffee and SOLSTAD OFFSHORE
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 0.47 times more return on investment than SOLSTAD OFFSHORE. However, ETFS Coffee ETC is 2.12 times less risky than SOLSTAD OFFSHORE. It trades about 0.67 of its potential returns per unit of risk. SOLSTAD OFFSHORE NK is currently generating about 0.28 per unit of risk. If you would invest 3,796 in ETFS Coffee ETC on September 2, 2024 and sell it today you would earn a total of 1,463 from holding ETFS Coffee ETC or generate 38.54% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
ETFS Coffee ETC vs. SOLSTAD OFFSHORE NK
Performance |
| Timeline |
| ETFS Coffee ETC |
| SOLSTAD OFFSHORE |
ETFS Coffee and SOLSTAD OFFSHORE Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and SOLSTAD OFFSHORE
The main advantage of trading using opposite ETFS Coffee and SOLSTAD OFFSHORE positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE will offset losses from the drop in SOLSTAD OFFSHORE's long position.| ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc |
| SOLSTAD OFFSHORE vs. CVS Health | SOLSTAD OFFSHORE vs. BE Semiconductor Industries | SOLSTAD OFFSHORE vs. Coor Service Management | SOLSTAD OFFSHORE vs. ATRYS HEALTH SA |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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