Correlation Between ETFS Coffee and UDR
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and UDR 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 UDR 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 UDR Inc, you can compare the effects of market volatilities on ETFS Coffee and UDR 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 UDR. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and UDR.
Diversification Opportunities for ETFS Coffee and UDR
0.76 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETFS and UDR is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and UDR Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on UDR Inc 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 UDR. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of UDR Inc has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and UDR go up and down completely randomly.
Pair Corralation between ETFS Coffee and UDR
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 40.0 times more return on investment than UDR. However, ETFS Coffee is 40.0 times more volatile than UDR Inc. It trades about 0.05 of its potential returns per unit of risk. UDR Inc is currently generating about 0.05 per unit of risk. If you would invest 107.00 in ETFS Coffee ETC on August 31, 2024 and sell it today you would earn a total of 5,071 from holding ETFS Coffee ETC or generate 4739.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.51% |
| Values | Daily Returns |
ETFS Coffee ETC vs. UDR Inc
Performance |
| Timeline |
| ETFS Coffee ETC |
| UDR Inc |
ETFS Coffee and UDR Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and UDR
The main advantage of trading using opposite ETFS Coffee and UDR positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, UDR 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 UDR will offset losses from the drop in UDR's long position.| ETFS Coffee vs. TELES Informationstechnologien AG | ETFS Coffee vs. National Storage Affiliates | ETFS Coffee vs. INFORMATION SVC GRP | ETFS Coffee vs. Datadog |
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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