Correlation Between Rough Rice and 30 Year
Can any of the company-specific risk be diversified away by investing in both Rough Rice and 30 Year 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 Rough Rice and 30 Year into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Rough Rice Futures and 30 Year Treasury, you can compare the effects of market volatilities on Rough Rice and 30 Year 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 Rough Rice with a short position of 30 Year. Check out your portfolio center. Please also check ongoing floating volatility patterns of Rough Rice and 30 Year.
Diversification Opportunities for Rough Rice and 30 Year
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Rough and ZBUSD is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Rough Rice Futures and 30 Year Treasury in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 30 Year Treasury and Rough Rice 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 Rough Rice Futures are associated (or correlated) with 30 Year. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 30 Year Treasury has no effect on the direction of Rough Rice i.e., Rough Rice and 30 Year go up and down completely randomly.
Pair Corralation between Rough Rice and 30 Year
Assuming the 90 days horizon Rough Rice Futures is expected to under-perform the 30 Year. In addition to that, Rough Rice is 2.05 times more volatile than 30 Year Treasury. It trades about -0.08 of its total potential returns per unit of risk. 30 Year Treasury is currently generating about 0.03 per unit of volatility. If you would invest 11,375 in 30 Year Treasury on November 3, 2024 and sell it today you would earn a total of 34.00 from holding 30 Year Treasury or generate 0.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Rough Rice Futures vs. 30 Year Treasury
Performance |
| Timeline |
| Rough Rice Futures |
| 30 Year Treasury |
Rough Rice and 30 Year Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Rough Rice and 30 Year
The main advantage of trading using opposite Rough Rice and 30 Year positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rough Rice position performs unexpectedly, 30 Year 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 30 Year will offset losses from the drop in 30 Year's long position.| Rough Rice vs. Nasdaq 100 | Rough Rice vs. Oat Futures | Rough Rice vs. Wheat Futures | Rough Rice vs. Feeder Cattle 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
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