Correlation Between Teucrium Sugar and Teucrium Corn
Can any of the company-specific risk be diversified away by investing in both Teucrium Sugar and Teucrium Corn 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 Teucrium Sugar and Teucrium Corn into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Teucrium Sugar and Teucrium Corn, you can compare the effects of market volatilities on Teucrium Sugar and Teucrium Corn 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 Teucrium Sugar with a short position of Teucrium Corn. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teucrium Sugar and Teucrium Corn.
Diversification Opportunities for Teucrium Sugar and Teucrium Corn
-0.79 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Teucrium and Teucrium is -0.79. Overlapping area represents the amount of risk that can be diversified away by holding Teucrium Sugar and Teucrium Corn in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teucrium Corn and Teucrium Sugar 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 Teucrium Sugar are associated (or correlated) with Teucrium Corn. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teucrium Corn has no effect on the direction of Teucrium Sugar i.e., Teucrium Sugar and Teucrium Corn go up and down completely randomly.
Pair Corralation between Teucrium Sugar and Teucrium Corn
Given the investment horizon of 90 days Teucrium Sugar is expected to under-perform the Teucrium Corn. But the etf apears to be less risky and, when comparing its historical volatility, Teucrium Sugar is 1.18 times less risky than Teucrium Corn. The etf trades about -0.24 of its potential returns per unit of risk. The Teucrium Corn is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 1,837 in Teucrium Corn on October 24, 2024 and sell it today you would earn a total of 149.00 from holding Teucrium Corn or generate 8.11% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Teucrium Sugar vs. Teucrium Corn
Performance |
| Timeline |
| Teucrium Sugar |
| Teucrium Corn |
Teucrium Sugar and Teucrium Corn Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Teucrium Sugar and Teucrium Corn
The main advantage of trading using opposite Teucrium Sugar and Teucrium Corn positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teucrium Sugar position performs unexpectedly, Teucrium Corn 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 Teucrium Corn will offset losses from the drop in Teucrium Corn's long position.| Teucrium Sugar vs. Teucrium Soybean | Teucrium Sugar vs. Teucrium Wheat | Teucrium Sugar vs. Teucrium Corn |
Check out your portfolio center.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.
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