Correlation Between 30 Day and Oat Futures

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

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

Diversification Opportunities for 30 Day and Oat Futures

-0.22

Correlation Coefficient

30 Day  Oat Futures

Very good diversification

The 3 months correlation between ZQUSD and Oat is -0.22. Overlapping area represents the amount of risk that can be diversified away by holding 30 Day Fed and Oat Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oat Futures and 30 Day 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 30 Day Fed 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 30 Day i.e., 30 Day and Oat Futures go up and down completely randomly.

Pair Corralation between 30 Day and Oat Futures

Assuming the 90 days horizon 30 Day Fed is expected to generate 0.01 times more return on investment than Oat Futures. However, 30 Day Fed is 69.14 times less risky than Oat Futures. It trades about 0.09 of its potential returns per unit of risk. Oat Futures is currently generating about 0.0 per unit of risk. If you would invest  9,548  in 30 Day Fed on November 19, 2024 and sell it today you would earn a total of  20.00  from holding 30 Day Fed or generate 0.21% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	96.88%
Values	Daily Returns

30 Day Fed  vs.  Oat Futures

30 Day Fed

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in 30 Day Fed are ranked lower than 7 (%) 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 current stock price tumult, may contribute to shorter-term losses for the shareholders.

Oat Futures

Risk-Adjusted Performance

Very Weak

Over the last 90 days Oat Futures has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, Oat Futures is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with 30 Day and Oat Futures

The main advantage of trading using opposite 30 Day and Oat Futures positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 30 Day 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.

The idea behind 30 Day Fed and Oat Futures 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 Commodity Directory module to find actively traded commodities issued by global exchanges.