Correlation Between ETFS Coffee and Zurich Insurance
Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and Zurich Insurance 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 Zurich Insurance 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 Zurich Insurance Group, you can compare the effects of market volatilities on ETFS Coffee and Zurich Insurance 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 Zurich Insurance. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and Zurich Insurance.
Diversification Opportunities for ETFS Coffee and Zurich Insurance
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between ETFS and Zurich is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and Zurich Insurance Group in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Zurich Insurance 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 Zurich Insurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Zurich Insurance has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and Zurich Insurance go up and down completely randomly.
Pair Corralation between ETFS Coffee and Zurich Insurance
Assuming the 90 days trading horizon ETFS Coffee ETC is expected to generate 1.15 times more return on investment than Zurich Insurance. However, ETFS Coffee is 1.15 times more volatile than Zurich Insurance Group. It trades about 0.1 of its potential returns per unit of risk. Zurich Insurance Group is currently generating about -0.15 per unit of risk. If you would invest 5,269 in ETFS Coffee ETC on October 17, 2024 and sell it today you would earn a total of 160.00 from holding ETFS Coffee ETC or generate 3.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 94.44% |
| Values | Daily Returns |
ETFS Coffee ETC vs. Zurich Insurance Group
Performance |
| Timeline |
| ETFS Coffee ETC |
| Zurich Insurance |
ETFS Coffee and Zurich Insurance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with ETFS Coffee and Zurich Insurance
The main advantage of trading using opposite ETFS Coffee and Zurich Insurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if ETFS Coffee position performs unexpectedly, Zurich Insurance 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 Zurich Insurance will offset losses from the drop in Zurich Insurance's long position.| ETFS Coffee vs. TRAVEL LEISURE DL 01 | ETFS Coffee vs. InPlay Oil Corp | ETFS Coffee vs. Easy Software AG | ETFS Coffee vs. Constellation Software |
| Zurich Insurance vs. ELMOS SEMICONDUCTOR | Zurich Insurance vs. ON SEMICONDUCTOR | Zurich Insurance vs. ETFS Coffee ETC | Zurich Insurance vs. Algonquin Power Utilities |
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 Valuation module to check real value of public entities based on technical and fundamental data.
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