Correlation Between Teucrium Sugar and Teucrium Wheat

Can any of the company-specific risk be diversified away by investing in both Teucrium Sugar and Teucrium Wheat 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 Teucrium Sugar and Teucrium Wheat into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Teucrium Sugar and Teucrium Wheat, you can compare the effects of market volatilities on Teucrium Sugar and Teucrium Wheat 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 Teucrium Sugar with a short position of Teucrium Wheat. Check out your portfolio center. Please also check ongoing floating volatility patterns of Teucrium Sugar and Teucrium Wheat.

Diversification Opportunities for Teucrium Sugar and Teucrium Wheat

0.73

Correlation Coefficient

Teucrium Sugar  Teucrium Wheat

Poor diversification

The 3 months correlation between Teucrium and Teucrium is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Teucrium Sugar and Teucrium Wheat in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teucrium Wheat and Teucrium Sugar 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 Teucrium Sugar are associated (or correlated) with Teucrium Wheat. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teucrium Wheat has no effect on the direction of Teucrium Sugar i.e., Teucrium Sugar and Teucrium Wheat go up and down completely randomly.

Pair Corralation between Teucrium Sugar and Teucrium Wheat

Given the investment horizon of 90 days Teucrium Sugar is expected to under-perform the Teucrium Wheat. In addition to that, Teucrium Sugar is 1.14 times more volatile than Teucrium Wheat. It trades about -0.19 of its total potential returns per unit of risk. Teucrium Wheat is currently generating about -0.12 per unit of volatility. If you would invest  514.00  in Teucrium Wheat on October 20, 2024 and sell it today you would lose (39.00) from holding Teucrium Wheat or give up 7.59% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Teucrium Sugar  vs.  Teucrium Wheat

Teucrium Sugar

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teucrium Sugar has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of weak performance in the last few months, the Etf's basic indicators remain rather sound which may send shares a bit higher in February 2025. The latest tumult may also be a sign of longer-term up-swing for the fund shareholders.

Teucrium Wheat

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Teucrium Wheat has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the exchange-traded fund private investors.

Pair Trading with Teucrium Sugar and Teucrium Wheat

The main advantage of trading using opposite Teucrium Sugar and Teucrium Wheat positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Teucrium Sugar position performs unexpectedly, Teucrium Wheat 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 Teucrium Wheat will offset losses from the drop in Teucrium Wheat's long position.

The idea behind Teucrium Sugar and Teucrium Wheat pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.