Correlation Between Soybean Futures and Micro Gold
Can any of the company-specific risk be diversified away by investing in both Soybean Futures and Micro Gold 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 Soybean Futures and Micro Gold into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Soybean Futures and Micro Gold Futures, you can compare the effects of market volatilities on Soybean Futures and Micro Gold 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 Soybean Futures with a short position of Micro Gold. Check out your portfolio center. Please also check ongoing floating volatility patterns of Soybean Futures and Micro Gold.
Diversification Opportunities for Soybean Futures and Micro Gold
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Soybean and Micro is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Soybean Futures and Micro Gold Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Micro Gold Futures and Soybean 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 Soybean Futures are associated (or correlated) with Micro Gold. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Micro Gold Futures has no effect on the direction of Soybean Futures i.e., Soybean Futures and Micro Gold go up and down completely randomly.
Pair Corralation between Soybean Futures and Micro Gold
Assuming the 90 days horizon Soybean Futures is expected to generate 0.69 times more return on investment than Micro Gold. However, Soybean Futures is 1.46 times less risky than Micro Gold. It trades about 0.05 of its potential returns per unit of risk. Micro Gold Futures is currently generating about -0.13 per unit of risk. If you would invest 97,900 in Soybean Futures on August 30, 2024 and sell it today you would earn a total of 975.00 from holding Soybean Futures or generate 1.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Soybean Futures vs. Micro Gold Futures
Performance |
| Timeline |
| Soybean Futures |
| Micro Gold Futures |
Soybean Futures and Micro Gold Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Soybean Futures and Micro Gold
The main advantage of trading using opposite Soybean Futures and Micro Gold positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Soybean Futures position performs unexpectedly, Micro Gold 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 Micro Gold will offset losses from the drop in Micro Gold's long position.| Soybean Futures vs. Gasoline RBOB | Soybean Futures vs. Rough Rice Futures | Soybean Futures vs. Platinum | Soybean Futures vs. E Mini SP 500 |
| Micro Gold vs. Soybean Futures | Micro Gold vs. E Mini SP 500 | Micro Gold vs. 30 Year Treasury | Micro Gold vs. 2 Year T Note 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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