Correlation Between United States and ETFS Coffee
Can any of the company-specific risk be diversified away by investing in both United States 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 United States and ETFS Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between United States Steel and ETFS Coffee ETC, you can compare the effects of market volatilities on United States 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 United States with a short position of ETFS Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of United States and ETFS Coffee.
Diversification Opportunities for United States and ETFS Coffee
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between United and ETFS is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding United States Steel 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 United States 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 United States Steel 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 United States i.e., United States and ETFS Coffee go up and down completely randomly.
Pair Corralation between United States and ETFS Coffee
Assuming the 90 days trading horizon United States Steel is expected to under-perform the ETFS Coffee. In addition to that, United States is 2.14 times more volatile than ETFS Coffee ETC. It trades about -0.09 of its total potential returns per unit of risk. ETFS Coffee ETC is currently generating about 0.02 per unit of volatility. If you would invest 5,239 in ETFS Coffee ETC on October 12, 2024 and sell it today you would earn a total of 11.00 from holding ETFS Coffee ETC or generate 0.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 83.33% |
| Values | Daily Returns |
United States Steel vs. ETFS Coffee ETC
Performance |
| Timeline |
| United States Steel |
| ETFS Coffee ETC |
United States and ETFS Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with United States and ETFS Coffee
The main advantage of trading using opposite United States and ETFS Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if United States 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.| United States vs. CeoTronics AG | United States vs. THRACE PLASTICS | United States vs. NEWELL RUBBERMAID | United States vs. AGF Management Limited |
| 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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