Correlation Between ETFS Coffee and Virtus Investment
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and Virtus Investment 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 Virtus Investment 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 Virtus Investment Partners, you can compare the effects of market volatilities on ETFS Coffee and Virtus Investment 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 Virtus Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and Virtus Investment.
Diversification Opportunities for ETFS Coffee and Virtus Investment
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between ETFS and Virtus is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and Virtus Investment Partners in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Virtus Investment 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 Virtus Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Virtus Investment has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and Virtus Investment go up and down completely randomly.
Pair Corralation between ETFS Coffee and Virtus Investment
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 1.21 times more return on investment than Virtus Investment. However, ETFS Coffee is 1.21 times more volatile than Virtus Investment Partners. It trades about 0.17 of its potential returns per unit of risk. Virtus Investment Partners is currently generating about 0.05 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 | Strong |
| Accuracy | 96.69% |
| Values | Daily Returns |
ETFS Coffee ETC vs. Virtus Investment Partners
Performance |
| Timeline |
| ETFS Coffee ETC |
| Virtus Investment |
ETFS Coffee and Virtus Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and Virtus Investment
The main advantage of trading using opposite ETFS Coffee and Virtus Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, Virtus Investment 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 Virtus Investment will offset losses from the drop in Virtus Investment's long position.| ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc |
| Virtus Investment vs. Blackstone Group | Virtus Investment vs. BlackRock | Virtus Investment vs. The Bank of | Virtus Investment vs. Ameriprise Financial |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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