Correlation Between 10 Year and Orange Juice
Can any of the company-specific risk be diversified away by investing in both 10 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 10 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 10 Year T Note Futures and Orange Juice, you can compare the effects of market volatilities on 10 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 10 Year with a short position of Orange Juice. Check out your portfolio center. Please also check ongoing floating volatility patterns of 10 Year and Orange Juice.
Diversification Opportunities for 10 Year and Orange Juice
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between ZNUSD and Orange is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding 10 Year T Note Futures and Orange Juice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange Juice and 10 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 10 Year T Note Futures 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 10 Year i.e., 10 Year and Orange Juice go up and down completely randomly.
Pair Corralation between 10 Year and Orange Juice
Assuming the 90 days horizon 10 Year is expected to generate 93.61 times less return on investment than Orange Juice. But when comparing it to its historical volatility, 10 Year T Note Futures is 6.2 times less risky than Orange Juice. It trades about 0.0 of its potential returns per unit of risk. Orange Juice is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 33,215 in Orange Juice on August 29, 2024 and sell it today you would earn a total of 18,085 from holding Orange Juice or generate 54.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.13% |
| Values | Daily Returns |
10 Year T Note Futures vs. Orange Juice
Performance |
| Timeline |
| 10 Year T |
| Orange Juice |
10 Year and Orange Juice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 10 Year and Orange Juice
The main advantage of trading using opposite 10 Year and Orange Juice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 10 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.The idea behind 10 Year T Note Futures and Orange Juice pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Orange Juice vs. Crude Oil | Orange Juice vs. Aluminum Futures | Orange Juice vs. Corn Futures | Orange Juice vs. Silver 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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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