Correlation Between SOLSTAD OFFSHORE and ETFS Coffee
Can any of the company-specific risk be diversified away by investing in both SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE and ETFS Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between SOLSTAD OFFSHORE NK and ETFS Coffee ETC, you can compare the effects of market volatilities on SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE with a short position of ETFS Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of SOLSTAD OFFSHORE and ETFS Coffee.
Diversification Opportunities for SOLSTAD OFFSHORE and ETFS Coffee
0.07 | Correlation Coefficient |
Significant diversification
The 3 months correlation between SOLSTAD and ETFS is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding SOLSTAD OFFSHORE NK 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 SOLSTAD OFFSHORE 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 SOLSTAD OFFSHORE NK 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 SOLSTAD OFFSHORE i.e., SOLSTAD OFFSHORE and ETFS Coffee go up and down completely randomly.
Pair Corralation between SOLSTAD OFFSHORE and ETFS Coffee
Assuming the 90 days horizon SOLSTAD OFFSHORE NK is expected to generate 2.0 times more return on investment than ETFS Coffee. However, SOLSTAD OFFSHORE is 2.0 times more volatile than ETFS Coffee ETC. It trades about 0.3 of its potential returns per unit of risk. ETFS Coffee ETC is currently generating about 0.47 per unit of risk. If you would invest 254.00 in SOLSTAD OFFSHORE NK on August 29, 2024 and sell it today you would earn a total of 91.00 from holding SOLSTAD OFFSHORE NK or generate 35.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
SOLSTAD OFFSHORE NK vs. ETFS Coffee ETC
Performance |
| Timeline |
| SOLSTAD OFFSHORE |
| ETFS Coffee ETC |
SOLSTAD OFFSHORE and ETFS Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with SOLSTAD OFFSHORE and ETFS Coffee
The main advantage of trading using opposite SOLSTAD OFFSHORE and ETFS Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if SOLSTAD OFFSHORE 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.| SOLSTAD OFFSHORE vs. ZIM Integrated Shipping | SOLSTAD OFFSHORE vs. Superior Plus Corp | SOLSTAD OFFSHORE vs. NMI Holdings | SOLSTAD OFFSHORE 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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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