Correlation Between Corn Futures and 30 Day

Can any of the company-specific risk be diversified away by investing in both Corn Futures and 30 Day 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 Corn Futures and 30 Day into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Corn Futures and 30 Day Fed, you can compare the effects of market volatilities on Corn Futures and 30 Day 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 Corn Futures with a short position of 30 Day. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corn Futures and 30 Day.

Diversification Opportunities for Corn Futures and 30 Day

0.76

Correlation Coefficient

Corn Futures  30 Day

Poor diversification

The 3 months correlation between Corn and ZQUSD is 0.76. Overlapping area represents the amount of risk that can be diversified away by holding Corn Futures and 30 Day Fed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on 30 Day Fed and Corn Futures 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 Corn Futures are associated (or correlated) with 30 Day. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of 30 Day Fed has no effect on the direction of Corn Futures i.e., Corn Futures and 30 Day go up and down completely randomly.

Pair Corralation between Corn Futures and 30 Day

Assuming the 90 days horizon Corn Futures is expected to generate 18.38 times more return on investment than 30 Day. However, Corn Futures is 18.38 times more volatile than 30 Day Fed. It trades about 0.18 of its potential returns per unit of risk. 30 Day Fed is currently generating about 0.12 per unit of risk. If you would invest  42,650  in Corn Futures on September 14, 2024 and sell it today you would earn a total of  1,700  from holding Corn Futures or generate 3.99% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	95.45%
Values	Daily Returns

Corn Futures  vs.  30 Day Fed

Corn Futures

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Corn Futures are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of fairly unsteady basic indicators, Corn Futures may actually be approaching a critical reversion point that can send shares even higher in January 2025.

30 Day Fed

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in 30 Day Fed are ranked lower than 13 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, 30 Day is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Corn Futures and 30 Day

The main advantage of trading using opposite Corn Futures and 30 Day positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corn Futures position performs unexpectedly, 30 Day 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 30 Day will offset losses from the drop in 30 Day's long position.

The idea behind Corn Futures and 30 Day Fed 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.