Correlation Between Oat Futures and Gasoline RBOB
Can any of the company-specific risk be diversified away by investing in both Oat Futures and Gasoline RBOB 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 Gasoline RBOB into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Oat Futures and Gasoline RBOB, you can compare the effects of market volatilities on Oat Futures and Gasoline RBOB 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 Gasoline RBOB. Check out your portfolio center. Please also check ongoing floating volatility patterns of Oat Futures and Gasoline RBOB.
Diversification Opportunities for Oat Futures and Gasoline RBOB
0.01 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Oat and Gasoline is 0.01. Overlapping area represents the amount of risk that can be diversified away by holding Oat Futures and Gasoline RBOB in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gasoline RBOB 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 Gasoline RBOB. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gasoline RBOB has no effect on the direction of Oat Futures i.e., Oat Futures and Gasoline RBOB go up and down completely randomly.
Pair Corralation between Oat Futures and Gasoline RBOB
Assuming the 90 days horizon Oat Futures is expected to generate 1.21 times more return on investment than Gasoline RBOB. However, Oat Futures is 1.21 times more volatile than Gasoline RBOB. It trades about 0.01 of its potential returns per unit of risk. Gasoline RBOB is currently generating about -0.07 per unit of risk. If you would invest 37,300 in Oat Futures on August 25, 2024 and sell it today you would lose (250.00) from holding Oat Futures or give up 0.67% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 99.48% |
| Values | Daily Returns |
Oat Futures vs. Gasoline RBOB
Performance |
| Timeline |
| Oat Futures |
| Gasoline RBOB |
Oat Futures and Gasoline RBOB Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Oat Futures and Gasoline RBOB
The main advantage of trading using opposite Oat Futures and Gasoline RBOB positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Oat Futures position performs unexpectedly, Gasoline RBOB 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 Gasoline RBOB will offset losses from the drop in Gasoline RBOB's long position.| Oat Futures vs. Class III Milk | Oat Futures vs. Orange Juice | Oat Futures vs. US Dollar | Oat Futures vs. Five Year Treasury Note |
| Gasoline RBOB vs. Crude Oil | Gasoline RBOB vs. Aluminum Futures | Gasoline RBOB vs. Corn Futures | Gasoline RBOB 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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
Other Complementary Tools
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Price Transformation Use Price Transformation models to analyze the depth of different equity instruments across global markets | |
| Price Ceiling Movement Calculate and plot Price Ceiling Movement for different equity instruments | |
| Stock Tickers Use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites | |
| Alpha Finder Use alpha and beta coefficients to find investment opportunities after accounting for the risk |