Correlation Between Lean Hogs and 2 Year
Can any of the company-specific risk be diversified away by investing in both Lean Hogs and 2 Year 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 2 Year 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 2 Year T Note Futures, you can compare the effects of market volatilities on Lean Hogs and 2 Year 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 2 Year. Check out your portfolio center. Please also check ongoing floating volatility patterns of Lean Hogs and 2 Year.
Diversification Opportunities for Lean Hogs and 2 Year
Significant diversification
The 3 months correlation between Lean and ZTUSD is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding Lean Hogs Futures and 2 Year T Note Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 2 Year T 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 2 Year. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 2 Year T has no effect on the direction of Lean Hogs i.e., Lean Hogs and 2 Year go up and down completely randomly.
Pair Corralation between Lean Hogs and 2 Year
Assuming the 90 days horizon Lean Hogs Futures is expected to generate 17.64 times more return on investment than 2 Year. However, Lean Hogs is 17.64 times more volatile than 2 Year T Note Futures. It trades about 0.0 of its potential returns per unit of risk. 2 Year T Note Futures is currently generating about -0.42 per unit of risk. If you would invest 8,213 in Lean Hogs Futures on August 25, 2024 and sell it today you would lose (45.00) from holding Lean Hogs Futures or give up 0.55% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Lean Hogs Futures vs. 2 Year T Note Futures
Performance |
| Timeline |
| Lean Hogs Futures |
| 2 Year T |
Lean Hogs and 2 Year Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Lean Hogs and 2 Year
The main advantage of trading using opposite Lean Hogs and 2 Year positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Lean Hogs position performs unexpectedly, 2 Year 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 2 Year will offset losses from the drop in 2 Year's long position.| Lean Hogs vs. Oat Futures | Lean Hogs vs. Wheat Futures | Lean Hogs vs. Feeder Cattle Futures | Lean Hogs vs. Micro Silver Futures |
| 2 Year vs. 30 Year Treasury | 2 Year vs. 30 Day Fed | 2 Year vs. Class III Milk | 2 Year vs. 10 Year T Note 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 Stock Screener module to find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook..
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