Correlation Between Five Year and Orange Juice
Can any of the company-specific risk be diversified away by investing in both Five Year and Orange Juice 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 Five Year and Orange Juice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Five Year Treasury Note and Orange Juice, you can compare the effects of market volatilities on Five Year and Orange Juice 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 Five Year with a short position of Orange Juice. Check out your portfolio center. Please also check ongoing floating volatility patterns of Five Year and Orange Juice.
Diversification Opportunities for Five Year and Orange Juice
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Five and Orange is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Five Year Treasury Note and Orange Juice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange Juice and Five Year 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 Five Year Treasury Note are associated (or correlated) with Orange Juice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Orange Juice has no effect on the direction of Five Year i.e., Five Year and Orange Juice go up and down completely randomly.
Pair Corralation between Five Year and Orange Juice
Assuming the 90 days horizon Five Year Treasury Note is expected to generate 0.11 times more return on investment than Orange Juice. However, Five Year Treasury Note is 9.25 times less risky than Orange Juice. It trades about 0.01 of its potential returns per unit of risk. Orange Juice is currently generating about -0.08 per unit of risk. If you would invest 10,634 in Five Year Treasury Note on November 3, 2024 and sell it today you would earn a total of 5.00 from holding Five Year Treasury Note or generate 0.05% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Five Year Treasury Note vs. Orange Juice
Performance |
| Timeline |
| Five Year Treasury |
| Orange Juice |
Five Year and Orange Juice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Five Year and Orange Juice
The main advantage of trading using opposite Five Year and Orange Juice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Five Year position performs unexpectedly, Orange Juice 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 Orange Juice will offset losses from the drop in Orange Juice's long position.| Five Year vs. Mini Dow Jones | Five Year vs. Gasoline RBOB | Five Year vs. Rough Rice Futures | Five Year vs. Platinum |
| Orange Juice vs. Micro Gold Futures | Orange Juice vs. Natural Gas | Orange Juice vs. Corn Futures | Orange Juice vs. Class III Milk |
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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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