Correlation Between 2 Year and Rough Rice
Can any of the company-specific risk be diversified away by investing in both 2 Year and Rough Rice 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 Rough Rice 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 Rough Rice Futures, you can compare the effects of market volatilities on 2 Year and Rough Rice 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 Rough Rice. Check out your portfolio center. Please also check ongoing floating volatility patterns of 2 Year and Rough Rice.
Diversification Opportunities for 2 Year and Rough Rice
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between ZTUSD and Rough is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding 2 Year T Note Futures and Rough Rice Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rough Rice 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 Rough Rice. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rough Rice Futures has no effect on the direction of 2 Year i.e., 2 Year and Rough Rice go up and down completely randomly.
Pair Corralation between 2 Year and Rough Rice
Assuming the 90 days horizon 2 Year is expected to generate 42.69 times less return on investment than Rough Rice. But when comparing it to its historical volatility, 2 Year T Note Futures is 12.77 times less risky than Rough Rice. It trades about 0.07 of its potential returns per unit of risk. Rough Rice Futures is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,411 in Rough Rice Futures on October 22, 2024 and sell it today you would earn a total of 70.00 from holding Rough Rice Futures or generate 4.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 90.48% |
| Values | Daily Returns |
2 Year T Note Futures vs. Rough Rice Futures
Performance |
| Timeline |
| 2 Year T |
| Rough Rice Futures |
2 Year and Rough Rice Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with 2 Year and Rough Rice
The main advantage of trading using opposite 2 Year and Rough Rice positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 2 Year position performs unexpectedly, Rough Rice 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 Rough Rice will offset losses from the drop in Rough Rice's long position.| 2 Year vs. Rough Rice Futures | 2 Year vs. Heating Oil | 2 Year vs. Lean Hogs Futures | 2 Year vs. Brent Crude Oil |
| Rough Rice vs. 30 Year Treasury | Rough Rice vs. 2 Year T Note Futures | Rough Rice vs. Orange Juice | Rough Rice vs. Heating Oil |
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 Stocks Directory module to find actively traded stocks across global markets.
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