Correlation Between Oat Futures and E Mini
Can any of the company-specific risk be diversified away by investing in both Oat Futures and E Mini 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 E Mini into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oat Futures and E Mini SP 500, you can compare the effects of market volatilities on Oat Futures and E Mini 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 E Mini. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oat Futures and E Mini.
Diversification Opportunities for Oat Futures and E Mini
0.31 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Oat and ESUSD is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Oat Futures and E Mini SP 500 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on E Mini SP 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 E Mini. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of E Mini SP has no effect on the direction of Oat Futures i.e., Oat Futures and E Mini go up and down completely randomly.
Pair Corralation between Oat Futures and E Mini
Assuming the 90 days horizon Oat Futures is expected to under-perform the E Mini. In addition to that, Oat Futures is 3.99 times more volatile than E Mini SP 500. It trades about -0.15 of its total potential returns per unit of risk. E Mini SP 500 is currently generating about 0.33 per unit of volatility. If you would invest 573,850 in E Mini SP 500 on September 1, 2024 and sell it today you would earn a total of 31,300 from holding E Mini SP 500 or generate 5.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Oat Futures vs. E Mini SP 500
Performance |
| Timeline |
| Oat Futures |
| E Mini SP |
Oat Futures and E Mini Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oat Futures and E Mini
The main advantage of trading using opposite Oat Futures and E Mini positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oat Futures position performs unexpectedly, E Mini 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 E Mini will offset losses from the drop in E Mini's long position.| Oat Futures vs. 2 Year T Note Futures | Oat Futures vs. Heating Oil | Oat Futures vs. Crude Oil | Oat Futures vs. Aluminum Futures |
| E Mini vs. 2 Year T Note Futures | E Mini vs. Heating Oil | E Mini vs. Crude Oil | E Mini vs. Aluminum 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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