Coffee Correlations

KCUSX Commodity   383.55  6.35  1.68%   
The correlation of Coffee is a statistical measure of how it moves in relation to other instruments. This measure is expressed in what is known as the correlation coefficient, which ranges between -1 and +1. A correlation greater than 0.8 is generally described as strong, whereas a correlation less than 0.5 is generally considered weak. If the correlation is 0, the equities are not correlated; they are entirely random.

Coffee Correlation With Market

Significant diversification

The correlation between Coffee and DJI is 0.03 (i.e., Significant diversification) for selected investment horizon. Overlapping area represents the amount of risk that can be diversified away by holding Coffee and DJI in the same portfolio, assuming nothing else is changed.
  
The ability to find closely correlated positions to Coffee could be a great tool in your tax-loss harvesting strategies, allowing investors a quick way to find a similar-enough asset to replace Coffee when you sell it. If you don't do this, your portfolio allocation will be skewed against your target asset allocation. So, investors can't just sell and buy back Coffee - that would be a violation of the tax code under the "wash sale" rule, and this is why you need to find a similar enough asset and use the proceeds from selling Coffee to buy it.

Moving together with Coffee Commodity

  0.81META Meta Platforms Sell-off TrendPairCorr
  0.69BRK-A Berkshire HathawayPairCorr
  0.89ALTM Arcadium Lithium plcPairCorr
  0.63VTR Ventas IncPairCorr
  0.61LIXTW Lixte BiotechnologyPairCorr
  0.69VRTX Vertex PharmaceuticalsPairCorr
  0.8DPMLF Dundee Precious MetalsPairCorr
  0.75UZD United States CellularPairCorr
  0.83BK Bank of New YorkPairCorr
  0.81DE Deere CompanyPairCorr
  0.84DTEGF Deutsche TelekomPairCorr
  0.79STPZ PIMCO 1 5PairCorr
  0.75AVDS American Century ETFPairCorr
  0.84GDXJ VanEck Junior GoldPairCorr
  0.64DFJ WisdomTree Japan SmallCapPairCorr
  0.85PCLO Virtus ETF TrustPairCorr
  0.78QLTI 2023 ETFPairCorr
  0.75DFSD Dimensional ETF TrustPairCorr

Moving against Coffee Commodity

  0.65MSFT MicrosoftPairCorr
  0.57CYDVF Cypress Development CorpPairCorr
  0.53NVDA NVIDIA Aggressive PushPairCorr
  0.47SGML Sigma Lithium ResourcesPairCorr
  0.45AAPL Apple IncPairCorr
  0.36GOOG Alphabet Class C Sell-off TrendPairCorr
  0.71GUMCX Guggenheim Market NeutralPairCorr

Related Correlations Analysis

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Correlation Matchups

Over a given time period, the two securities move together when the Correlation Coefficient is positive. Conversely, the two assets move in opposite directions when the Correlation Coefficient is negative. Determining your positions' relationship to each other is valuable for analyzing and projecting your portfolio's future expected return and risk.
High positive correlations   
MGCUSDSILUSD
MGCUSDLBUSD
SILUSDLBUSD
PLUSDMGCUSD
PLUSDSILUSD
PLUSDZCUSX
  
High negative correlations   
CCUSDLBUSD
MGCUSDCCUSD
SILUSDCCUSD
CLUSDLBUSD
MGCUSDCLUSD
SILUSDCLUSD

Risk-Adjusted Indicators

There is a big difference between Coffee Commodity performing well and Coffee Commodity doing well as a business compared to the competition. There are so many exceptions to the norm that investors cannot definitively determine what's good or bad unless they analyze Coffee's multiple risk-adjusted performance indicators across the competitive landscape. These indicators are quantitative in nature and help investors forecast volatility and risk-adjusted expected returns across various positions.

Coffee Related Commodities

One prevalent trading approach among algorithmic traders in the commodities sector involves employing market-neutral strategies, wherein each trade is designed to hedge away specific risks. Given that this approach necessitates two distinct transactions, if one position underperforms unexpectedly, the other can potentially offset some of the losses. This method can be applied to commodities such as Coffee, pairing it with other commodities or financial instruments to create a balanced, market-neutral setup.
 Risk & Return  Correlation