Correlation Between 30 Day and Orange Juice
Can any of the company-specific risk be diversified away by investing in both 30 Day 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 30 Day and Orange Juice into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 30 Day Fed and Orange Juice, you can compare the effects of market volatilities on 30 Day 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 30 Day with a short position of Orange Juice. Check out your portfolio center. Please also check ongoing floating volatility patterns of 30 Day and Orange Juice.
Diversification Opportunities for 30 Day and Orange Juice
0.22 | Correlation Coefficient |
Modest diversification
The 3 months correlation between ZQUSD and Orange is 0.22. Overlapping area represents the amount of risk that can be diversified away by holding 30 Day Fed and Orange Juice in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Orange Juice and 30 Day 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 30 Day Fed 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 30 Day i.e., 30 Day and Orange Juice go up and down completely randomly.
Pair Corralation between 30 Day and Orange Juice
Assuming the 90 days horizon 30 Day Fed is expected to generate 0.0 times more return on investment than Orange Juice. However, 30 Day Fed is 372.15 times less risky than Orange Juice. It trades about -0.18 of its potential returns per unit of risk. Orange Juice is currently generating about -0.08 per unit of risk. If you would invest 9,570 in 30 Day Fed on November 3, 2024 and sell it today you would lose (2.00) from holding 30 Day Fed or give up 0.02% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
30 Day Fed vs. Orange Juice
Performance |
| Timeline |
| 30 Day Fed |
| Orange Juice |
30 Day and Orange Juice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 30 Day and Orange Juice
The main advantage of trading using opposite 30 Day and Orange Juice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 30 Day 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.| 30 Day vs. Soybean Futures | 30 Day vs. Rough Rice Futures | 30 Day vs. Class III Milk | 30 Day vs. Crude Oil |
| Orange Juice vs. Micro Gold Futures | Orange Juice vs. Natural Gas | Orange Juice vs. Corn Futures | Orange Juice vs. Class III Milk |
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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.
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