Correlation Between Silver Futures and Soybean Futures

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

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

Diversification Opportunities for Silver Futures and Soybean Futures

0.0

Correlation Coefficient

Silver Futures  Soybean Futures

Pay attention - limited upside

The 3 months correlation between Silver and Soybean is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Silver Futures and Soybean Futures in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Soybean Futures and Silver 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 Silver Futures are associated (or correlated) with Soybean Futures. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Soybean Futures has no effect on the direction of Silver Futures i.e., Silver Futures and Soybean Futures go up and down completely randomly.

Pair Corralation between Silver Futures and Soybean Futures

If you would invest  2,834  in Silver Futures on August 31, 2024 and sell it today you would earn a total of  234.00  from holding Silver Futures or generate 8.26% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Silver Futures  vs.  Soybean Futures

Silver Futures

Risk-Adjusted Performance

5 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Silver Futures are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of rather unsteady basic indicators, Silver Futures may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Soybean Futures

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Silver Futures and Soybean Futures

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

The idea behind Silver Futures and Soybean 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.