Correlation Between Gasoline RBOB and 10 Year
Can any of the company-specific risk be diversified away by investing in both Gasoline RBOB and 10 Year 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 10 Year into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Gasoline RBOB and 10 Year T Note Futures, you can compare the effects of market volatilities on Gasoline RBOB and 10 Year 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 10 Year. Check out your portfolio center. Please also check ongoing floating volatility patterns of Gasoline RBOB and 10 Year.
Diversification Opportunities for Gasoline RBOB and 10 Year
-0.12 | Correlation Coefficient |
Good diversification
The 3 months correlation between Gasoline and ZNUSD is -0.12. Overlapping area represents the amount of risk that can be diversified away by holding Gasoline RBOB and 10 Year T Note Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 10 Year T 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 10 Year. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 10 Year T has no effect on the direction of Gasoline RBOB i.e., Gasoline RBOB and 10 Year go up and down completely randomly.
Pair Corralation between Gasoline RBOB and 10 Year
Assuming the 90 days horizon Gasoline RBOB is expected to under-perform the 10 Year. In addition to that, Gasoline RBOB is 5.67 times more volatile than 10 Year T Note Futures. It trades about -0.02 of its total potential returns per unit of risk. 10 Year T Note Futures is currently generating about -0.03 per unit of volatility. If you would invest 11,289 in 10 Year T Note Futures on August 29, 2024 and sell it today you would lose (251.00) from holding 10 Year T Note Futures or give up 2.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Gasoline RBOB vs. 10 Year T Note Futures
Performance |
| Timeline |
| Gasoline RBOB |
| 10 Year T |
Gasoline RBOB and 10 Year Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Gasoline RBOB and 10 Year
The main advantage of trading using opposite Gasoline RBOB and 10 Year positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Gasoline RBOB position performs unexpectedly, 10 Year 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 10 Year will offset losses from the drop in 10 Year'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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Commodity Channel Use Commodity Channel Index to analyze current equity momentum | |
| Idea Optimizer Use advanced portfolio builder with pre-computed micro ideas to build optimal portfolio | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |