Correlation Between Orange Juice and Soybean Futures
Can any of the company-specific risk be diversified away by investing in both Orange Juice and Soybean Futures 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 Soybean Futures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Orange Juice and Soybean Futures, you can compare the effects of market volatilities on Orange Juice and Soybean Futures 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 Soybean Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Orange Juice and Soybean Futures.
Diversification Opportunities for Orange Juice and Soybean Futures
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Orange and Soybean is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Orange Juice and Soybean Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soybean 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 Soybean Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soybean Futures has no effect on the direction of Orange Juice i.e., Orange Juice and Soybean Futures go up and down completely randomly.
Pair Corralation between Orange Juice and Soybean Futures
Assuming the 90 days horizon Orange Juice is expected to generate 1.91 times more return on investment than Soybean Futures. However, Orange Juice is 1.91 times more volatile than Soybean Futures. It trades about 0.1 of its potential returns per unit of risk. Soybean Futures is currently generating about 0.0 per unit of risk. If you would invest 49,145 in Orange Juice on August 28, 2024 and sell it today you would earn a total of 1,855 from holding Orange Juice or generate 3.77% 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. Soybean Futures
Performance |
| Timeline |
| Orange Juice |
| Soybean Futures |
Orange Juice and Soybean Futures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Orange Juice and Soybean Futures
The main advantage of trading using opposite Orange Juice and Soybean Futures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Orange Juice position performs unexpectedly, Soybean Futures 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 Soybean Futures will offset losses from the drop in Soybean Futures' long position.| Orange Juice vs. Wheat Futures | Orange Juice vs. Feeder Cattle Futures | Orange Juice vs. Micro Silver Futures | Orange Juice vs. 30 Day Fed |
| Soybean Futures vs. Gasoline RBOB | Soybean Futures vs. Rough Rice Futures | Soybean Futures vs. Platinum | Soybean Futures 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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