Correlation Between Wheat Futures and Micro Gold
Can any of the company-specific risk be diversified away by investing in both Wheat Futures 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 Wheat Futures and Micro Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wheat Futures and Micro Gold Futures, you can compare the effects of market volatilities on Wheat Futures 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 Wheat Futures with a short position of Micro Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wheat Futures and Micro Gold.
Diversification Opportunities for Wheat Futures and Micro Gold
0.11 | Correlation Coefficient |
Average diversification
The 3 months correlation between Wheat and Micro is 0.11. Overlapping area represents the amount of risk that can be diversified away by holding Wheat 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 Wheat Futures 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 Wheat 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 Wheat Futures i.e., Wheat Futures and Micro Gold go up and down completely randomly.
Pair Corralation between Wheat Futures and Micro Gold
Assuming the 90 days horizon Wheat Futures is expected to under-perform the Micro Gold. In addition to that, Wheat Futures is 2.02 times more volatile than Micro Gold Futures. It trades about -0.04 of its total potential returns per unit of risk. Micro Gold Futures is currently generating about 0.08 per unit of volatility. If you would invest 189,880 in Micro Gold Futures on September 3, 2024 and sell it today you would earn a total of 75,820 from holding Micro Gold Futures or generate 39.93% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.57% |
| Values | Daily Returns |
Wheat Futures vs. Micro Gold Futures
Performance |
| Timeline |
| Wheat Futures |
| Micro Gold Futures |
Wheat Futures and Micro Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wheat Futures and Micro Gold
The main advantage of trading using opposite Wheat Futures and Micro Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wheat Futures 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.| Wheat Futures vs. Micro E mini Russell | Wheat Futures vs. US Dollar | Wheat Futures vs. Five Year Treasury Note | Wheat Futures vs. Class III Milk |
| Micro Gold vs. E Mini SP 500 | Micro Gold vs. 30 Year Treasury | Micro Gold vs. 2 Year T Note Futures | Micro Gold vs. Heating Oil |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
Other Complementary Tools
| Fundamentals Comparison Compare fundamentals across multiple equities to find investing opportunities | |
| Bonds Directory Find actively traded corporate debentures issued by US companies | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Portfolio Diagnostics Use generated alerts and portfolio events aggregator to diagnose current holdings | |
| Latest Portfolios Quick portfolio dashboard that showcases your latest portfolios |