Correlation Between CARSALESCOM and ETFS Coffee
Can any of the company-specific risk be diversified away by investing in both CARSALESCOM 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 CARSALESCOM and ETFS Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between CARSALESCOM and ETFS Coffee ETC, you can compare the effects of market volatilities on CARSALESCOM 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 CARSALESCOM with a short position of ETFS Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of CARSALESCOM and ETFS Coffee.
Diversification Opportunities for CARSALESCOM and ETFS Coffee
0.34 | Correlation Coefficient |
Weak diversification
The 3 months correlation between CARSALESCOM and ETFS is 0.34. Overlapping area represents the amount of risk that can be diversified away by holding CARSALESCOM 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 CARSALESCOM 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 CARSALESCOM 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 CARSALESCOM i.e., CARSALESCOM and ETFS Coffee go up and down completely randomly.
Pair Corralation between CARSALESCOM and ETFS Coffee
Assuming the 90 days trading horizon CARSALESCOM is expected to under-perform the ETFS Coffee. But the stock apears to be less risky and, when comparing its historical volatility, CARSALESCOM is 1.86 times less risky than ETFS Coffee. The stock trades about -0.06 of its potential returns per unit of risk. The ETFS Coffee ETC is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 3,796 in ETFS Coffee ETC on October 1, 2024 and sell it today you would earn a total of 1,417 from holding ETFS Coffee ETC or generate 37.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.0% |
| Values | Daily Returns |
CARSALESCOM vs. ETFS Coffee ETC
Performance |
| Timeline |
| CARSALESCOM |
| ETFS Coffee ETC |
CARSALESCOM and ETFS Coffee Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with CARSALESCOM and ETFS Coffee
The main advantage of trading using opposite CARSALESCOM and ETFS Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CARSALESCOM 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.| CARSALESCOM vs. Pembina Pipeline Corp | CARSALESCOM vs. Boyd Gaming | CARSALESCOM vs. Penn National Gaming | CARSALESCOM vs. New Residential Investment |
| 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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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