Correlation Between 2 Year and Palladium
Can any of the company-specific risk be diversified away by investing in both 2 Year and Palladium 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 2 Year and Palladium into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between 2 Year T Note Futures and Palladium, you can compare the effects of market volatilities on 2 Year and Palladium 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 2 Year with a short position of Palladium. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2 Year and Palladium.
Diversification Opportunities for 2 Year and Palladium
Weak diversification
The 3 months correlation between ZTUSD and Palladium is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding 2 Year T Note Futures and Palladium in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Palladium and 2 Year 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 2 Year T Note Futures are associated (or correlated) with Palladium. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Palladium has no effect on the direction of 2 Year i.e., 2 Year and Palladium go up and down completely randomly.
Pair Corralation between 2 Year and Palladium
Assuming the 90 days horizon 2 Year is expected to generate 206.97 times less return on investment than Palladium. But when comparing it to its historical volatility, 2 Year T Note Futures is 26.19 times less risky than Palladium. It trades about 0.04 of its potential returns per unit of risk. Palladium is currently generating about 0.34 of returns per unit of risk over similar time horizon. If you would invest 91,210 in Palladium on November 3, 2024 and sell it today you would earn a total of 15,640 from holding Palladium or generate 17.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
2 Year T Note Futures vs. Palladium
Performance |
| Timeline |
| 2 Year T |
| Palladium |
2 Year and Palladium Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 2 Year and Palladium
The main advantage of trading using opposite 2 Year and Palladium positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2 Year position performs unexpectedly, Palladium 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 Palladium will offset losses from the drop in Palladium's long position.| 2 Year vs. Class III Milk | 2 Year vs. Live Cattle Futures | 2 Year vs. Heating Oil | 2 Year vs. Corn Futures |
| Palladium vs. Feeder Cattle Futures | Palladium vs. Rough Rice Futures | Palladium vs. Coffee | Palladium vs. Soybean 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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Technical Analysis Check basic technical indicators and analysis based on most latest market data | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments |