Commodities pairs in Forex

[Fernando Botti]

Commodities pairs in Forex - Article by Fernando Botti.

Correlation does not imply in chance. A place-common one that it was forgotten in times fast-results, is a

powerful tool against fallacies in all the areas, mainly in sciences and finances. Benjamin Disraeli a time affirmed:

“It has three types of lies: faded and statistical lies, lies.”

Not, I am not opposing my position defended in this blog for the use of more robust mathematical tools for analysis of the

market, but yes, the bad use of these. When two systems if hold during an interval of time of similar form or in symmetrical

opposing way, we can conclude that.) if they influence mutually or b.) is influenced by a distinct common force. However

one third case exists, that occurs systematically, c.) only coincidence. However it is the forgotten alternative more. Known

situation as spurious correlation.

I remember a funny history where certain time a professor of the Whitewash Tech, David Leinweber, was behind obscure

relations between indices and economic assets of everybody, imagining that it would find ineficiências exploratórias, and in

fact, it discovered that 1983 enter and 1993 had a clear relation enter the variation of the price of the butter of Bangladesh

and the oscillations of the S&P500. I do not know that end took this study, however is simple to imagine its consequences.

I will argue the importance of the coefficient of the true correlation of asset for minimização of risks in another article,

I will comment briefly on the economic relation between some countries and its merchant influence in the exchange

quotations here, thus allowing, to find characteristics notables.

Figure 1. Weekly quotation of the gold

Figure 2. Weekly quotation AUD/USD.

Some relations between currencies exist (pairs) that they are atreladas directly to the oscillation of some commodities,

the three negotiated pairs more and that they belong to this criterion are USD/CAD - U.S. Dollar x Canadian Dollar,

AUD/USD - Australian Dollar x U.S. Dollar and NZD/USD - New Zealand Dollar x U.S. Dollar. For a peculiar reason

each one of these pairs possesss one singelo nickname, USD/CAD is known as “lonnie”, the AUD/USD as “aussie”

and the NZD/USD as “kiwi”, in some specialized magazines are related only by these peculiar descriptions.

The currencies of these countries strong are influenced by its commodities exported to the United States, have one strong
correlation with some products as precious gold and other metals in the case of Australia and Nova Zelândia, as it is

observed in the graph above. Already Canada exports the raw oil, then we will get with certainty a high coefficient

between the CAD and the Oil.

Others Articles: http://www.atrattore.com/blog/

Hugs,

Fernando Botti