Correlation Between Platinum and Wheat Futures
Can any of the company-specific risk be diversified away by investing in both Platinum and Wheat 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 Platinum and Wheat Futures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Platinum and Wheat Futures, you can compare the effects of market volatilities on Platinum and Wheat 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 Platinum with a short position of Wheat Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Platinum and Wheat Futures.
Diversification Opportunities for Platinum and Wheat Futures
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Platinum and Wheat is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Platinum and Wheat Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wheat Futures and Platinum 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 Platinum are associated (or correlated) with Wheat Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wheat Futures has no effect on the direction of Platinum i.e., Platinum and Wheat Futures go up and down completely randomly.
Pair Corralation between Platinum and Wheat Futures
Assuming the 90 days horizon Platinum is expected to generate 0.87 times more return on investment than Wheat Futures. However, Platinum is 1.15 times less risky than Wheat Futures. It trades about -0.02 of its potential returns per unit of risk. Wheat Futures is currently generating about -0.05 per unit of risk. If you would invest 108,770 in Platinum on August 29, 2024 and sell it today you would lose (15,570) from holding Platinum or give up 14.31% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.51% |
| Values | Daily Returns |
Platinum vs. Wheat Futures
Performance |
| Timeline |
| Platinum |
| Wheat Futures |
Platinum and Wheat Futures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Platinum and Wheat Futures
The main advantage of trading using opposite Platinum and Wheat Futures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Platinum position performs unexpectedly, Wheat 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 Wheat Futures will offset losses from the drop in Wheat Futures' long position.| Platinum vs. Oat Futures | Platinum vs. Wheat Futures | Platinum vs. Feeder Cattle Futures | Platinum vs. Micro Silver Futures |
| Wheat Futures vs. Nasdaq 100 | Wheat Futures vs. Oat Futures | Wheat Futures vs. Feeder Cattle Futures | Wheat Futures vs. Micro Silver 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Positions Ratings Determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Commodity Directory Find actively traded commodities issued by global exchanges | |
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like |