Correlation Between Gasoline RBOB and Copper
Can any of the company-specific risk be diversified away by investing in both Gasoline RBOB and Copper 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 Copper into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gasoline RBOB and Copper, you can compare the effects of market volatilities on Gasoline RBOB and Copper 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 Copper. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gasoline RBOB and Copper.
Diversification Opportunities for Gasoline RBOB and Copper
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Gasoline and Copper is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Gasoline RBOB and Copper in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copper 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 Copper. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copper has no effect on the direction of Gasoline RBOB i.e., Gasoline RBOB and Copper go up and down completely randomly.
Pair Corralation between Gasoline RBOB and Copper
Assuming the 90 days horizon Gasoline RBOB is expected to generate 0.79 times more return on investment than Copper. However, Gasoline RBOB is 1.26 times less risky than Copper. It trades about 0.04 of its potential returns per unit of risk. Copper is currently generating about -0.11 per unit of risk. If you would invest 193.00 in Gasoline RBOB on August 29, 2024 and sell it today you would earn a total of 2.00 from holding Gasoline RBOB or generate 1.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gasoline RBOB vs. Copper
Performance |
| Timeline |
| Gasoline RBOB |
| Copper |
Gasoline RBOB and Copper Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gasoline RBOB and Copper
The main advantage of trading using opposite Gasoline RBOB and Copper positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gasoline RBOB position performs unexpectedly, Copper 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 Copper will offset losses from the drop in Copper's long position.| Gasoline RBOB vs. Mini Dow Jones | Gasoline RBOB vs. Rough Rice Futures | Gasoline RBOB vs. Platinum | Gasoline RBOB vs. Soybean 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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