Correlation Between ETFS Coffee and Electronic Arts

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

Diversification Opportunities for ETFS Coffee and Electronic Arts

0.07

Correlation Coefficient

ETFS Coffee  Electronic Arts

Significant diversification

The 3 months correlation between ETFS and Electronic is 0.07. Overlapping area represents the amount of risk that can be diversified away by holding ETFS Coffee ETC and Electronic Arts in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Electronic Arts 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 Electronic Arts. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Electronic Arts has no effect on the direction of ETFS Coffee i.e., ETFS Coffee and Electronic Arts go up and down completely randomly.

Pair Corralation between ETFS Coffee and Electronic Arts

Assuming the 90 days trading horizon ETFS Coffee ETC is expected to under-perform the Electronic Arts. In addition to that, ETFS Coffee is 2.09 times more volatile than Electronic Arts. It trades about -0.18 of its total potential returns per unit of risk. Electronic Arts is currently generating about 0.02 per unit of volatility. If you would invest  12,854  in Electronic Arts on April 24, 2025 and sell it today you would earn a total of  86.00  from holding Electronic Arts or generate 0.67% return on investment over 90 days.

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

ETFS Coffee ETC  vs.  Electronic Arts

ETFS Coffee ETC

Risk-Adjusted Performance

Very Weak

Over the last 90 days ETFS Coffee ETC has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in August 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

Electronic Arts

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Electronic Arts are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Electronic Arts is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with ETFS Coffee and Electronic Arts

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

The idea behind ETFS Coffee ETC and Electronic Arts 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.