Correlation Between Feeder Cattle and 30 Day
Can any of the company-specific risk be diversified away by investing in both Feeder Cattle and 30 Day 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 30 Day 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 30 Day Fed, you can compare the effects of market volatilities on Feeder Cattle and 30 Day 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 30 Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of Feeder Cattle and 30 Day.
Diversification Opportunities for Feeder Cattle and 30 Day
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Feeder and ZQUSD is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Feeder Cattle Futures and 30 Day Fed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 30 Day Fed 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 30 Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 30 Day Fed has no effect on the direction of Feeder Cattle i.e., Feeder Cattle and 30 Day go up and down completely randomly.
Pair Corralation between Feeder Cattle and 30 Day
Assuming the 90 days horizon Feeder Cattle Futures is expected to generate 13.8 times more return on investment than 30 Day. However, Feeder Cattle is 13.8 times more volatile than 30 Day Fed. It trades about 0.03 of its potential returns per unit of risk. 30 Day Fed is currently generating about 0.06 per unit of risk. If you would invest 24,488 in Feeder Cattle Futures on August 29, 2024 and sell it today you would earn a total of 1,322 from holding Feeder Cattle Futures or generate 5.4% 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. 30 Day Fed
Performance |
| Timeline |
| Feeder Cattle Futures |
| 30 Day Fed |
Feeder Cattle and 30 Day Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Feeder Cattle and 30 Day
The main advantage of trading using opposite Feeder Cattle and 30 Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Feeder Cattle position performs unexpectedly, 30 Day 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 30 Day will offset losses from the drop in 30 Day's long position.| Feeder Cattle vs. Sugar | Feeder Cattle vs. Micro Gold Futures | Feeder Cattle vs. Heating Oil | Feeder Cattle vs. Platinum |
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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.
Other Complementary Tools
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Theme Ratings Determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Instant Ratings Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Volatility Analysis Get historical volatility and risk analysis based on latest market data |