Correlation Between Feeder Cattle and Micro Gold
Can any of the company-specific risk be diversified away by investing in both Feeder Cattle and Micro Gold 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 Feeder Cattle and Micro Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Feeder Cattle Futures and Micro Gold Futures, you can compare the effects of market volatilities on Feeder Cattle and Micro Gold 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 Feeder Cattle with a short position of Micro Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feeder Cattle and Micro Gold.
Diversification Opportunities for Feeder Cattle and Micro Gold
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Feeder and Micro is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Feeder Cattle Futures and Micro Gold Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Gold Futures and Feeder Cattle 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 Feeder Cattle Futures are associated (or correlated) with Micro Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Gold Futures has no effect on the direction of Feeder Cattle i.e., Feeder Cattle and Micro Gold go up and down completely randomly.
Pair Corralation between Feeder Cattle and Micro Gold
Assuming the 90 days horizon Feeder Cattle Futures is expected to generate 1.18 times more return on investment than Micro Gold. However, Feeder Cattle is 1.18 times more volatile than Micro Gold Futures. It trades about 0.03 of its potential returns per unit of risk. Micro Gold Futures is currently generating about 0.04 per unit of risk. If you would invest 27,320 in Feeder Cattle Futures on December 1, 2024 and sell it today you would earn a total of 178.00 from holding Feeder Cattle Futures or generate 0.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Feeder Cattle Futures vs. Micro Gold Futures
Performance |
| Timeline |
| Feeder Cattle Futures |
| Micro Gold Futures |
Feeder Cattle and Micro Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Feeder Cattle and Micro Gold
The main advantage of trading using opposite Feeder Cattle and Micro Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Feeder Cattle position performs unexpectedly, Micro Gold 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 Micro Gold will offset losses from the drop in Micro Gold's long position.| Feeder Cattle vs. Natural Gas | Feeder Cattle vs. Soybean Futures | Feeder Cattle vs. E Mini SP 500 | Feeder Cattle vs. Micro Silver Futures |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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