Correlation Between ETFS Coffee and THRACE PLASTICS
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and THRACE PLASTICS 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 THRACE PLASTICS 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 THRACE PLASTICS, you can compare the effects of market volatilities on ETFS Coffee and THRACE PLASTICS 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 THRACE PLASTICS. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and THRACE PLASTICS.
Diversification Opportunities for ETFS Coffee and THRACE PLASTICS
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETFS and THRACE is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and THRACE PLASTICS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on THRACE PLASTICS 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 THRACE PLASTICS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of THRACE PLASTICS has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and THRACE PLASTICS go up and down completely randomly.
Pair Corralation between ETFS Coffee and THRACE PLASTICS
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 1.53 times more return on investment than THRACE PLASTICS. However, ETFS Coffee is 1.53 times more volatile than THRACE PLASTICS. It trades about 0.23 of its potential returns per unit of risk. THRACE PLASTICS is currently generating about 0.16 per unit of risk. If you would invest 5,346 in ETFS Coffee ETC on November 3, 2024 and sell it today you would earn a total of 642.00 from holding ETFS Coffee ETC or generate 12.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
ETFS Coffee ETC vs. THRACE PLASTICS
Performance |
| Timeline |
| ETFS Coffee ETC |
| THRACE PLASTICS |
ETFS Coffee and THRACE PLASTICS Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and THRACE PLASTICS
The main advantage of trading using opposite ETFS Coffee and THRACE PLASTICS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, THRACE PLASTICS 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 THRACE PLASTICS will offset losses from the drop in THRACE PLASTICS's long position.| ETFS Coffee vs. Transport International Holdings | ETFS Coffee vs. US Physical Therapy | ETFS Coffee vs. BII Railway Transportation | ETFS Coffee vs. BORR DRILLING NEW |
| THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS vs. Apple Inc | THRACE PLASTICS 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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
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