Correlation Between Oat Futures and Nasdaq 100
Can any of the company-specific risk be diversified away by investing in both Oat Futures and Nasdaq 100 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 Nasdaq 100 into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oat Futures and Nasdaq 100, you can compare the effects of market volatilities on Oat Futures and Nasdaq 100 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 Nasdaq 100. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oat Futures and Nasdaq 100.
Diversification Opportunities for Oat Futures and Nasdaq 100
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Oat and Nasdaq is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Oat Futures and Nasdaq 100 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nasdaq 100 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 Nasdaq 100. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nasdaq 100 has no effect on the direction of Oat Futures i.e., Oat Futures and Nasdaq 100 go up and down completely randomly.
Pair Corralation between Oat Futures and Nasdaq 100
Assuming the 90 days horizon Oat Futures is expected to under-perform the Nasdaq 100. In addition to that, Oat Futures is 1.9 times more volatile than Nasdaq 100. It trades about -0.01 of its total potential returns per unit of risk. Nasdaq 100 is currently generating about 0.1 per unit of volatility. If you would invest 1,586,900 in Nasdaq 100 on August 29, 2024 and sell it today you would earn a total of 512,250 from holding Nasdaq 100 or generate 32.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 99.22% |
| Values | Daily Returns |
Oat Futures vs. Nasdaq 100
Performance |
| Timeline |
| Oat Futures |
| Nasdaq 100 |
Oat Futures and Nasdaq 100 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oat Futures and Nasdaq 100
The main advantage of trading using opposite Oat Futures and Nasdaq 100 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oat Futures position performs unexpectedly, Nasdaq 100 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 Nasdaq 100 will offset losses from the drop in Nasdaq 100's long position.| Oat Futures vs. Class III Milk | Oat Futures vs. 30 Year Treasury | Oat Futures vs. Sugar | Oat Futures vs. Lean Hogs Futures |
| Nasdaq 100 vs. Corn Futures | Nasdaq 100 vs. Five Year Treasury Note | Nasdaq 100 vs. Live Cattle Futures | Nasdaq 100 vs. Lean Hogs 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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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