Correlation Between Orange Juice and Rough Rice
Can any of the company-specific risk be diversified away by investing in both Orange Juice and Rough Rice 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 Rough Rice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orange Juice and Rough Rice Futures, you can compare the effects of market volatilities on Orange Juice and Rough Rice 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 Rough Rice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orange Juice and Rough Rice.
Diversification Opportunities for Orange Juice and Rough Rice
0.15 | Correlation Coefficient |
Average diversification
The 3 months correlation between Orange and Rough is 0.15. Overlapping area represents the amount of risk that can be diversified away by holding Orange Juice and Rough Rice Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rough Rice Futures 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 Rough Rice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rough Rice Futures has no effect on the direction of Orange Juice i.e., Orange Juice and Rough Rice go up and down completely randomly.
Pair Corralation between Orange Juice and Rough Rice
Assuming the 90 days horizon Orange Juice is expected to generate 1.32 times more return on investment than Rough Rice. However, Orange Juice is 1.32 times more volatile than Rough Rice Futures. It trades about 0.07 of its potential returns per unit of risk. Rough Rice Futures is currently generating about -0.01 per unit of risk. If you would invest 33,215 in Orange Juice on August 29, 2024 and sell it today you would earn a total of 18,085 from holding Orange Juice or generate 54.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.06% |
| Values | Daily Returns |
Orange Juice vs. Rough Rice Futures
Performance |
| Timeline |
| Orange Juice |
| Rough Rice Futures |
Orange Juice and Rough Rice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orange Juice and Rough Rice
The main advantage of trading using opposite Orange Juice and Rough Rice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orange Juice position performs unexpectedly, Rough Rice 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 Rough Rice will offset losses from the drop in Rough Rice's long position.| Orange Juice vs. Crude Oil | Orange Juice vs. Aluminum Futures | Orange Juice vs. Corn Futures | Orange Juice vs. Silver Futures |
| Rough Rice vs. Copper | Rough Rice vs. Gold Futures | Rough Rice vs. Soybean Meal Futures | Rough Rice vs. Coffee |
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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.
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