Correlation Between Orange Juice and US Dollar
Can any of the company-specific risk be diversified away by investing in both Orange Juice and US Dollar 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 Orange Juice and US Dollar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orange Juice and US Dollar, you can compare the effects of market volatilities on Orange Juice and US Dollar 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 Orange Juice with a short position of US Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orange Juice and US Dollar.
Diversification Opportunities for Orange Juice and US Dollar
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between Orange and DXUSD is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Orange Juice and US Dollar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Dollar and Orange Juice 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 Orange Juice are associated (or correlated) with US Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Dollar has no effect on the direction of Orange Juice i.e., Orange Juice and US Dollar go up and down completely randomly.
Pair Corralation between Orange Juice and US Dollar
Assuming the 90 days horizon Orange Juice is expected to generate 3.84 times more return on investment than US Dollar. However, Orange Juice is 3.84 times more volatile than US Dollar. It trades about 0.11 of its potential returns per unit of risk. US Dollar is currently generating about 0.26 per unit of risk. If you would invest 48,405 in Orange Juice on August 25, 2024 and sell it today you would earn a total of 2,145 from holding Orange Juice or generate 4.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Orange Juice vs. US Dollar
Performance |
| Timeline |
| Orange Juice |
| US Dollar |
Orange Juice and US Dollar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orange Juice and US Dollar
The main advantage of trading using opposite Orange Juice and US Dollar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orange Juice position performs unexpectedly, US Dollar 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 US Dollar will offset losses from the drop in US Dollar's long position.| Orange Juice vs. Brent Crude Oil | Orange Juice vs. Natural Gas | Orange Juice vs. Five Year Treasury Note | Orange Juice vs. Micro Gold Futures |
| US Dollar vs. 10 Year T Note Futures | US Dollar vs. Nasdaq 100 | US Dollar vs. Oat Futures | US Dollar vs. Wheat 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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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