Correlation Between Feeder Cattle and Micro Silver
Can any of the company-specific risk be diversified away by investing in both Feeder Cattle and Micro Silver 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 Silver 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 Silver Futures, you can compare the effects of market volatilities on Feeder Cattle and Micro Silver 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 Silver. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feeder Cattle and Micro Silver.
Diversification Opportunities for Feeder Cattle and Micro Silver
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Feeder and Micro is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Feeder Cattle Futures and Micro Silver Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Silver 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 Silver. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Silver Futures has no effect on the direction of Feeder Cattle i.e., Feeder Cattle and Micro Silver go up and down completely randomly.
Pair Corralation between Feeder Cattle and Micro Silver
Assuming the 90 days horizon Feeder Cattle is expected to generate 1.73 times less return on investment than Micro Silver. But when comparing it to its historical volatility, Feeder Cattle Futures is 2.13 times less risky than Micro Silver. It trades about 0.06 of its potential returns per unit of risk. Micro Silver Futures is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 2,544 in Micro Silver Futures on August 25, 2024 and sell it today you would earn a total of 590.00 from holding Micro Silver Futures or generate 23.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 97.66% |
| Values | Daily Returns |
Feeder Cattle Futures vs. Micro Silver Futures
Performance |
| Timeline |
| Feeder Cattle Futures |
| Micro Silver Futures |
Feeder Cattle and Micro Silver Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Feeder Cattle and Micro Silver
The main advantage of trading using opposite Feeder Cattle and Micro Silver positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Feeder Cattle position performs unexpectedly, Micro Silver 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 Silver will offset losses from the drop in Micro Silver's long position.| Feeder Cattle vs. Heating Oil | Feeder Cattle vs. Crude Oil | Feeder Cattle vs. Aluminum Futures | Feeder Cattle vs. Corn Futures |
| Micro Silver vs. Nasdaq 100 | Micro Silver vs. Oat Futures | Micro Silver vs. Wheat Futures | Micro Silver vs. Feeder Cattle 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Sectors List of equity sectors categorizing publicly traded companies based on their primary business activities | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |