Correlation Between Gasoline RBOB and US Dollar
Can any of the company-specific risk be diversified away by investing in both Gasoline RBOB 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 Gasoline RBOB and US Dollar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gasoline RBOB and US Dollar, you can compare the effects of market volatilities on Gasoline RBOB 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 Gasoline RBOB with a short position of US Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gasoline RBOB and US Dollar.
Diversification Opportunities for Gasoline RBOB and US Dollar
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gasoline and DXUSD is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Gasoline RBOB and US Dollar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Dollar and Gasoline RBOB 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 Gasoline RBOB 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 Gasoline RBOB i.e., Gasoline RBOB and US Dollar go up and down completely randomly.
Pair Corralation between Gasoline RBOB and US Dollar
Assuming the 90 days horizon Gasoline RBOB is expected to under-perform the US Dollar. In addition to that, Gasoline RBOB is 2.78 times more volatile than US Dollar. It trades about -0.02 of its total potential returns per unit of risk. US Dollar is currently generating about 0.15 per unit of volatility. If you would invest 10,386 in US Dollar on August 31, 2024 and sell it today you would earn a total of 194.00 from holding US Dollar or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gasoline RBOB vs. US Dollar
Performance |
| Timeline |
| Gasoline RBOB |
| US Dollar |
Gasoline RBOB and US Dollar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gasoline RBOB and US Dollar
The main advantage of trading using opposite Gasoline RBOB and US Dollar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gasoline RBOB 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.| Gasoline RBOB vs. Corn Futures | Gasoline RBOB vs. Silver Futures | Gasoline RBOB vs. Micro E mini Russell | Gasoline RBOB vs. Soybean Futures |
| US Dollar vs. Micro Silver Futures | US Dollar vs. 30 Day Fed | US Dollar vs. Mini Dow Jones | US Dollar vs. Gasoline RBOB |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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