Correlation Between 2 Year and Oat Futures
Can any of the company-specific risk be diversified away by investing in both 2 Year and Oat Futures 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 Oat Futures 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 Oat Futures, you can compare the effects of market volatilities on 2 Year and Oat Futures 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 Oat Futures. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2 Year and Oat Futures.
Diversification Opportunities for 2 Year and Oat Futures
0.06 | Correlation Coefficient |
Significant diversification
The 3 months correlation between ZTUSD and Oat is 0.06. Overlapping area represents the amount of risk that can be diversified away by holding 2 Year T Note Futures and Oat Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oat Futures 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 Oat Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oat Futures has no effect on the direction of 2 Year i.e., 2 Year and Oat Futures go up and down completely randomly.
Pair Corralation between 2 Year and Oat Futures
Assuming the 90 days horizon 2 Year is expected to generate 71.5 times less return on investment than Oat Futures. But when comparing it to its historical volatility, 2 Year T Note Futures is 15.37 times less risky than Oat Futures. It trades about 0.0 of its potential returns per unit of risk. Oat Futures is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 36,125 in Oat Futures on September 3, 2024 and sell it today you would lose (2,375) from holding Oat Futures or give up 6.57% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 98.82% |
| Values | Daily Returns |
2 Year T Note Futures vs. Oat Futures
Performance |
| Timeline |
| 2 Year T |
| Oat Futures |
2 Year and Oat Futures Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 2 Year and Oat Futures
The main advantage of trading using opposite 2 Year and Oat Futures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2 Year position performs unexpectedly, Oat Futures 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 Oat Futures will offset losses from the drop in Oat Futures' long position.| 2 Year vs. 10 Year T Note Futures | 2 Year vs. Nasdaq 100 | 2 Year vs. Oat Futures | 2 Year vs. Wheat Futures |
| Oat Futures vs. Heating Oil | Oat Futures vs. Crude Oil | Oat Futures vs. Aluminum Futures | Oat Futures vs. Corn 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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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