Correlation Between Oat Futures and US Dollar
Can any of the company-specific risk be diversified away by investing in both Oat Futures and US Dollar 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 Oat Futures and US Dollar into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oat Futures and US Dollar, you can compare the effects of market volatilities on Oat Futures and US Dollar 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 Oat Futures with a short position of US Dollar. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oat Futures and US Dollar.
Diversification Opportunities for Oat Futures and US Dollar
-0.62 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Oat and DXUSD is -0.62. Overlapping area represents the amount of risk that can be diversified away by holding Oat Futures and US Dollar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on US Dollar and Oat Futures 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 Oat Futures are associated (or correlated) with US Dollar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of US Dollar has no effect on the direction of Oat Futures i.e., Oat Futures and US Dollar go up and down completely randomly.
Pair Corralation between Oat Futures and US Dollar
Assuming the 90 days horizon Oat Futures is expected to generate 4.13 times more return on investment than US Dollar. However, Oat Futures is 4.13 times more volatile than US Dollar. It trades about 0.05 of its potential returns per unit of risk. US Dollar is currently generating about 0.09 per unit of risk. If you would invest 35,450 in Oat Futures on November 9, 2024 and sell it today you would earn a total of 950.00 from holding Oat Futures or generate 2.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
Oat Futures vs. US Dollar
Performance |
| Timeline |
| Oat Futures |
| US Dollar |
Oat Futures and US Dollar Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oat Futures and US Dollar
The main advantage of trading using opposite Oat Futures and US Dollar positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oat Futures position performs unexpectedly, US Dollar 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 US Dollar will offset losses from the drop in US Dollar's long position.| Oat Futures vs. Aluminum Futures | Oat Futures vs. Corn Futures | Oat Futures vs. Silver Futures | Oat Futures vs. Orange Juice |
| US Dollar vs. Orange Juice | US Dollar vs. Lumber Futures | US Dollar vs. Heating Oil | US Dollar vs. Five Year Treasury Note |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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