Correlation Between ETFS Coffee and MAGNUM MINING

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

By analyzing existing cross correlation between ETFS Coffee ETC and MAGNUM MINING EXP, you can compare the effects of market volatilities on ETFS Coffee and MAGNUM MINING 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 ETFS Coffee with a short position of MAGNUM MINING. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and MAGNUM MINING.

Diversification Opportunities for ETFS Coffee and MAGNUM MINING

0.0

Correlation Coefficient

ETFS Coffee  MAGNUM MINING

Pay attention - limited upside

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

Pair Corralation between ETFS Coffee and MAGNUM MINING

If you would invest  5,213  in ETFS Coffee ETC on October 26, 2024 and sell it today you would earn a total of  451.00  from holding ETFS Coffee ETC or generate 8.65% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

ETFS Coffee ETC  vs.  MAGNUM MINING EXP

ETFS Coffee ETC

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ETFS Coffee ETC are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, ETFS Coffee reported solid returns over the last few months and may actually be approaching a breakup point.

MAGNUM MINING EXP

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days MAGNUM MINING EXP has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, MAGNUM MINING is not utilizing all of its potentials. The newest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with ETFS Coffee and MAGNUM MINING

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

The idea behind ETFS Coffee ETC and MAGNUM MINING EXP 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.