Correlation Between Micro Silver and Corn Futures
Can any of the company-specific risk be diversified away by investing in both Micro Silver and Corn 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 Micro Silver and Corn Futures into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Micro Silver Futures and Corn Futures, you can compare the effects of market volatilities on Micro Silver and Corn 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 Micro Silver with a short position of Corn Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of Micro Silver and Corn Futures.
Diversification Opportunities for Micro Silver and Corn Futures
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Micro and Corn is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Micro Silver Futures and Corn Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corn Futures and Micro Silver 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 Micro Silver Futures are associated (or correlated) with Corn Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corn Futures has no effect on the direction of Micro Silver i.e., Micro Silver and Corn Futures go up and down completely randomly.
Pair Corralation between Micro Silver and Corn Futures
Assuming the 90 days trading horizon Micro Silver Futures is expected to generate 1.44 times more return on investment than Corn Futures. However, Micro Silver is 1.44 times more volatile than Corn Futures. It trades about 0.08 of its potential returns per unit of risk. Corn Futures is currently generating about 0.04 per unit of risk. If you would invest 2,236 in Micro Silver Futures on November 3, 2024 and sell it today you would earn a total of 989.00 from holding Micro Silver Futures or generate 44.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.83% |
| Values | Daily Returns |
Micro Silver Futures vs. Corn Futures
Performance |
| Timeline |
| Micro Silver Futures |
| Corn Futures |
Micro Silver and Corn Futures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Micro Silver and Corn Futures
The main advantage of trading using opposite Micro Silver and Corn Futures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Micro Silver position performs unexpectedly, Corn 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 Corn Futures will offset losses from the drop in Corn Futures' long position.| Micro Silver vs. Cocoa | Micro Silver vs. Lean Hogs Futures | Micro Silver vs. Lumber Futures | Micro Silver vs. E Mini SP 500 |
| Corn Futures vs. Cocoa | Corn Futures vs. Lean Hogs Futures | Corn Futures vs. Live Cattle Futures | Corn Futures vs. US Dollar |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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