Correlation Between ETFS Coffee and Nordic Semiconductor

Can any of the company-specific risk be diversified away by investing in both ETFS Coffee and Nordic Semiconductor 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 Nordic Semiconductor 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 Nordic Semiconductor ASA, you can compare the effects of market volatilities on ETFS Coffee and Nordic Semiconductor 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 Nordic Semiconductor. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETFS Coffee and Nordic Semiconductor.

Diversification Opportunities for ETFS Coffee and Nordic Semiconductor

-0.01

Correlation Coefficient

ETFS Coffee  Nordic Semiconductor

Good diversification

The 3 months correlation between ETFS and Nordic is -0.01. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and Nordic Semiconductor ASA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nordic Semiconductor ASA 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 Nordic Semiconductor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nordic Semiconductor ASA has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and Nordic Semiconductor go up and down completely randomly.

Pair Corralation between ETFS Coffee and Nordic Semiconductor

Assuming the 90 days trading horizon ETFS Coffee ETC is expected to under-perform the Nordic Semiconductor. In addition to that, ETFS Coffee is 1.1 times more volatile than Nordic Semiconductor ASA. It trades about -0.14 of its total potential returns per unit of risk. Nordic Semiconductor ASA is currently generating about 0.17 per unit of volatility. If you would invest  864.00  in Nordic Semiconductor ASA on October 11, 2024 and sell it today you would earn a total of  48.00  from holding Nordic Semiconductor ASA or generate 5.56% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	94.12%
Values	Daily Returns

ETFS Coffee ETC  vs.  Nordic Semiconductor ASA

ETFS Coffee ETC

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in ETFS Coffee ETC are ranked lower than 16 (%) 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.

Nordic Semiconductor ASA

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nordic Semiconductor ASA are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nordic Semiconductor may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with ETFS Coffee and Nordic Semiconductor

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

The idea behind ETFS Coffee ETC and Nordic Semiconductor ASA 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..