Correlation Between Ultra Clean and ETFS Coffee
Can any of the company-specific risk be diversified away by investing in both Ultra Clean 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 Ultra Clean and ETFS Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ultra Clean Holdings and ETFS Coffee ETC, you can compare the effects of market volatilities on Ultra Clean 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 Ultra Clean with a short position of ETFS Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ultra Clean and ETFS Coffee.
Diversification Opportunities for Ultra Clean and ETFS Coffee
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ultra and ETFS is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Ultra Clean Holdings 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 Ultra Clean 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 Ultra Clean Holdings 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 Ultra Clean i.e., Ultra Clean and ETFS Coffee go up and down completely randomly.
Pair Corralation between Ultra Clean and ETFS Coffee
Assuming the 90 days horizon Ultra Clean Holdings is expected to generate 1.25 times more return on investment than ETFS Coffee. However, Ultra Clean is 1.25 times more volatile than ETFS Coffee ETC. It trades about 0.19 of its potential returns per unit of risk. ETFS Coffee ETC is currently generating about 0.02 per unit of risk. If you would invest 3,500 in Ultra Clean Holdings on October 12, 2024 and sell it today you would earn a total of 240.00 from holding Ultra Clean Holdings or generate 6.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 88.24% |
| Values | Daily Returns |
Ultra Clean Holdings vs. ETFS Coffee ETC
Performance |
| Timeline |
| Ultra Clean Holdings |
| ETFS Coffee ETC |
Ultra Clean and ETFS Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ultra Clean and ETFS Coffee
The main advantage of trading using opposite Ultra Clean and ETFS Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ultra Clean 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.| Ultra Clean vs. NAGOYA RAILROAD | Ultra Clean vs. TRAINLINE PLC LS | Ultra Clean vs. SAFEROADS HLDGS | Ultra Clean vs. FUYO GENERAL LEASE |
| ETFS Coffee vs. Clean Energy Fuels | ETFS Coffee vs. CALTAGIRONE EDITORE | ETFS Coffee vs. United States Steel | ETFS Coffee vs. Ultra Clean Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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