Correlation Between Lean Hogs and Micro E
Can any of the company-specific risk be diversified away by investing in both Lean Hogs and Micro E 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 Lean Hogs and Micro E into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Lean Hogs Futures and Micro E mini Russell, you can compare the effects of market volatilities on Lean Hogs and Micro E 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 Lean Hogs with a short position of Micro E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lean Hogs and Micro E.
Diversification Opportunities for Lean Hogs and Micro E
Average diversification
The 3 months correlation between Lean and Micro is 0.12. Overlapping area represents the amount of risk that can be diversified away by holding Lean Hogs Futures and Micro E mini Russell in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro E mini and Lean Hogs 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 Lean Hogs Futures are associated (or correlated) with Micro E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro E mini has no effect on the direction of Lean Hogs i.e., Lean Hogs and Micro E go up and down completely randomly.
Pair Corralation between Lean Hogs and Micro E
Assuming the 90 days horizon Lean Hogs Futures is expected to under-perform the Micro E. In addition to that, Lean Hogs is 1.24 times more volatile than Micro E mini Russell. It trades about -0.17 of its total potential returns per unit of risk. Micro E mini Russell is currently generating about 0.07 per unit of volatility. If you would invest 225,870 in Micro E mini Russell on October 22, 2024 and sell it today you would earn a total of 2,820 from holding Micro E mini Russell or generate 1.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.0% |
| Values | Daily Returns |
Lean Hogs Futures vs. Micro E mini Russell
Performance |
| Timeline |
| Lean Hogs Futures |
| Micro E mini |
Lean Hogs and Micro E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lean Hogs and Micro E
The main advantage of trading using opposite Lean Hogs and Micro E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lean Hogs position performs unexpectedly, Micro E 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 E will offset losses from the drop in Micro E's long position.| Lean Hogs vs. Crude Oil | Lean Hogs vs. Palladium | Lean Hogs vs. Gasoline RBOB | Lean Hogs vs. Rough Rice Futures |
| Micro E vs. Aluminum Futures | Micro E vs. Heating Oil | Micro E vs. 30 Year Treasury | Micro E vs. E Mini SP 500 |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Portfolio Manager State of the art Portfolio Manager to monitor and improve performance of your invested capital | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Portfolio Anywhere Track or share privately all of your investments from the convenience of any device |