Correlation Between ETC On and ETC Group

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

By analyzing existing cross correlation between ETC on CMCI and ETC Group Global, you can compare the effects of market volatilities on ETC On and ETC Group 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 ETC On with a short position of ETC Group. Check out your portfolio center. Please also check ongoing floating volatility patterns of ETC On and ETC Group.

Diversification Opportunities for ETC On and ETC Group

-0.3

Correlation Coefficient

ETC On  ETC Group

Very good diversification

The 3 months correlation between ETC and ETC is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding ETC on CMCI and ETC Group Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ETC Group Global and ETC On 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 ETC on CMCI are associated (or correlated) with ETC Group. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ETC Group Global has no effect on the direction of ETC On i.e., ETC On and ETC Group go up and down completely randomly.

Pair Corralation between ETC On and ETC Group

Assuming the 90 days trading horizon ETC on CMCI is expected to under-perform the ETC Group. But the etf apears to be less risky and, when comparing its historical volatility, ETC on CMCI is 1.17 times less risky than ETC Group. The etf trades about -0.03 of its potential returns per unit of risk. The ETC Group Global is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest  1,013  in ETC Group Global on April 23, 2025 and sell it today you would earn a total of  406.00  from holding ETC Group Global or generate 40.08% return on investment over 90 days.

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

ETC on CMCI  vs.  ETC Group Global

ETC on CMCI

Risk-Adjusted Performance

Very Weak

Over the last 90 days ETC on CMCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ETC On is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

ETC Group Global

Risk-Adjusted Performance

Strong

Compared to the overall equity markets, risk-adjusted returns on investments in ETC Group Global are ranked lower than 27 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, ETC Group unveiled solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with ETC On and ETC Group

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

The idea behind ETC on CMCI and ETC Group Global 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.