Correlation Between AW Revenue and Spot Coffee

Can any of the company-specific risk be diversified away by investing in both AW Revenue and Spot 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 AW Revenue and Spot Coffee into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between AW Revenue Royalties and Spot Coffee, you can compare the effects of market volatilities on AW Revenue and Spot 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 AW Revenue with a short position of Spot Coffee. Check out your portfolio center. Please also check ongoing floating volatility patterns of AW Revenue and Spot Coffee.

Diversification Opportunities for AW Revenue and Spot Coffee

0.0

Correlation Coefficient

AW Revenue  Spot Coffee

Pay attention - limited upside

The 3 months correlation between AWRRF and Spot is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding AW Revenue Royalties and Spot Coffee in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Spot Coffee and AW Revenue 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 AW Revenue Royalties are associated (or correlated) with Spot Coffee. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Spot Coffee has no effect on the direction of AW Revenue i.e., AW Revenue and Spot Coffee go up and down completely randomly.

Pair Corralation between AW Revenue and Spot Coffee

If you would invest  0.10  in Spot Coffee on December 27, 2024 and sell it today you would earn a total of  0.13  from holding Spot Coffee or generate 130.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

AW Revenue Royalties  vs.  Spot Coffee

AW Revenue Royalties

Risk-Adjusted Performance

Very Weak

Over the last 90 days AW Revenue Royalties has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, AW Revenue is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Spot Coffee

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Spot Coffee are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile technical and fundamental indicators, Spot Coffee reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with AW Revenue and Spot Coffee

The main advantage of trading using opposite AW Revenue and Spot Coffee positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AW Revenue position performs unexpectedly, Spot 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 Spot Coffee will offset losses from the drop in Spot Coffee's long position.

The idea behind AW Revenue Royalties and Spot Coffee pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.