Correlational Dynamics in Global Markets

By Tex Green

This book contains relatively simple methods for predicting the movements of global stock markets as well as commodities and futures. The book is written in an easy to read essay type format that presents 6 sections. The sections include risk management, arbitrage, correlations in comkmodities markets and the global dynamics of stock index trading. The goal of the book is to present the reader with information that allows some ability to predict movements from one market to another and allow for the building of a global trading strategy involving stock indexes and commodities. The relationship between commodities and currencies is explained and with the methods in the book you will be able to build a portfolio of commodities and futures that all move together and anticipate these movements in advance of the herd.

• Language: English
• Publisher: BookBaby
• Release date: Feb 29, 2012
• ISBN: 9781620953693

Book preview

Introduction

This Booklet is designed to introduce you to the concept of global correlations in the stock market in addition to several trading methods that relate to dividend paying stocks and arbitrage. Risk and the assessment of risk while diversifying your portfolio can provide stability and longevity to your portfolio in the event of sudden down turns or misfortune. Additionally the correlations in this book form the basis of sound economic principles and relationships between a few of the most common commodity and currency relationships. The trading of Stock indexes may never replace individual stocks however they are an excellent and less risky method of playing global futures on a regular basis. Profits are something you should hope to pick up regularly and therefore this author recommends keeping risk to a minimum and not becoming over extended in the heat of the moment. The psychology of the markets and individuals compress the last section and the psychology and sociology behind the individual and the herd. Understanding why and how others are reacting helps to put you in the other person’s shoes whether separated by 10 miles or 10,000, the large fund or the disorganized group. The basis of any trade must take each of these factors into account and by finding one or more correlation in a good buying position we can hope to divine the direction of hundreds of stocks and perhaps dozens of commodities and currencies.

Correlations in Global Markets

Abstract

The purpose of this paper is to bring forth several concepts on statistics and stock market correlations. The need to be aware of statistical probability is of great importance when planning for future trades. Correlations and correlational dynamics are closely related although separate in there nature and between these two similar types of information we can hope to prognosticate moves in the prices of various securities, commodities and currencies minutes, hours and even days in advance. There are several types of information we need to examine and each is slightly different. The first is weekly financial data and announcements, commodities correlations, currency rates and statistical probability in the markets. Through the wide scale application of these concepts we can hope to be ahead of the game and prepared for sudden upswings or downward trends with a high degree of accuracy. Additional and perhaps critical to any decision in acting upon these correlations is the market range of the underlying commodity or security and determining its consensus forecast for the near and medium term. The simplest way to think of it is we would be hesitant to act on a correlation to buy if the stock in question were already too high or sell if the commodity were low without some extra ordinary reason or a corresponding forecast that outweighed the present correlation. By following a few simple checks on any trade we can reduce risks in meaningful ways and come out a winner with remarkable regularity.

Correlations in the Stock Market

Correlations can be found throughout stocks and commodities and often are related directly to currency values and interest rates. These correlations may often be the bread and butter of any trades you are making on a daily or weekly basis. Direct correlations can be found between individual stocks and commodities prices such as oil or gold mining stocks. In addition commodities markets have high relations to certain futures values such as a correlation between the Russian stock index and the price of oil while currency appreciation or depreciation may affect other indexes more directly such as the Yen and its relation to growth in Japanese exports. Often you may find carryover or spillover effects from one market to

Reviews for Correlational Dynamics in Global Markets

[Mike · Rating: 4 out of 5 stars]

A concise primer, so obviously you aren't going to get a treasure trove of concrete correlations to watch. Yet from a conceptual and general point of view a worthwhile read nevertheless and a few good tips, such as how to scout for arbitrage opportunities and the impact of dividends, can be scooped up.