Correlation Between Reinsurance Group and ETFS Coffee
Can any of the company-specific risk be diversified away by investing in both Reinsurance Group and ETFS Coffee 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 Reinsurance Group and ETFS Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Reinsurance Group of and ETFS Coffee ETC, you can compare the effects of market volatilities on Reinsurance Group and ETFS Coffee 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 Reinsurance Group with a short position of ETFS Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Reinsurance Group and ETFS Coffee.
Diversification Opportunities for Reinsurance Group and ETFS Coffee
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Reinsurance and ETFS is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Reinsurance Group of and ETFS Coffee ETC in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETFS Coffee ETC and Reinsurance Group 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 Reinsurance Group of are associated (or correlated) with ETFS Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETFS Coffee ETC has no effect on the direction of Reinsurance Group i.e., Reinsurance Group and ETFS Coffee go up and down completely randomly.
Pair Corralation between Reinsurance Group and ETFS Coffee
Assuming the 90 days trading horizon Reinsurance Group of is expected to under-perform the ETFS Coffee. But the stock apears to be less risky and, when comparing its historical volatility, Reinsurance Group of is 2.61 times less risky than ETFS Coffee. The stock trades about -0.2 of its potential returns per unit of risk. The ETFS Coffee ETC is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 4,131 in ETFS Coffee ETC on September 13, 2024 and sell it today you would earn a total of 1,411 from holding ETFS Coffee ETC or generate 34.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Reinsurance Group of vs. ETFS Coffee ETC
Performance |
| Timeline |
| Reinsurance Group |
| ETFS Coffee ETC |
Reinsurance Group and ETFS Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Reinsurance Group and ETFS Coffee
The main advantage of trading using opposite Reinsurance Group and ETFS Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Reinsurance Group position performs unexpectedly, ETFS Coffee 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 ETFS Coffee will offset losses from the drop in ETFS Coffee's long position.| Reinsurance Group vs. MUENCHRUECKUNSADR 110 | Reinsurance Group vs. China Reinsurance | Reinsurance Group vs. Superior Plus Corp | Reinsurance Group vs. SIVERS SEMICONDUCTORS AB |
| ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee vs. Apple Inc | ETFS Coffee 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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