Correlation Between Teucrium Soybean and Teucrium Sugar

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

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

Diversification Opportunities for Teucrium Soybean and Teucrium Sugar

0.19

Correlation Coefficient

Teucrium Soybean  Teucrium Sugar

Average diversification

The 3 months correlation between Teucrium and Teucrium is 0.19. Overlapping area represents the amount of risk that can be diversified away by holding Teucrium Soybean and Teucrium Sugar in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teucrium Sugar and Teucrium Soybean 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 Soybean are associated (or correlated) with Teucrium Sugar. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teucrium Sugar has no effect on the direction of Teucrium Soybean i.e., Teucrium Soybean and Teucrium Sugar go up and down completely randomly.

Pair Corralation between Teucrium Soybean and Teucrium Sugar

Given the investment horizon of 90 days Teucrium Soybean is expected to generate 1.31 times more return on investment than Teucrium Sugar. However, Teucrium Soybean is 1.31 times more volatile than Teucrium Sugar. It trades about 0.21 of its potential returns per unit of risk. Teucrium Sugar is currently generating about -0.24 per unit of risk. If you would invest  2,072  in Teucrium Soybean on October 22, 2024 and sell it today you would earn a total of  109.00  from holding Teucrium Soybean or generate 5.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Teucrium Soybean  vs.  Teucrium Sugar

Teucrium Soybean

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Teucrium Soybean are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, Teucrium Soybean is not utilizing all of its potentials. The recent stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Teucrium Soybean and Teucrium Sugar

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

The idea behind Teucrium Soybean and Teucrium Sugar 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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.