NAK1987

SPY vs DBC correlation back to long term trend (low correlation)

AMEX:DBC   Invesco DB Commodity Index Tracking Fund

Question was this : Even though SPY and QQQ are currently in red trading mode meaning no buying stocks for me , can I enter new trades on commodities funds ??

My long term test from 2008 to now determined this

2008 to current date SPY vs DBC
Regression coefficient beta == -7.88
Correlation == 0.28
meaning long term negative/low correlation

2020 Jan 1st to 2021 Dec 21st
Regression coefficient == 17.85
Correlation 0.9
meaning for that period the two instruments were fairly correlated

2021 Dec 21st to April 12 2022
Regression coefficient beta == -4.15
Correlation 0.32
meaning from Dec 21st 2021 to now , for the time being SPY and DBC are back to the long term trend of low correlation

Result : I think it's reasonable to continue to long strong commodities when I see reasonable entries on them as long as this low correlation between SPY and DBC remains . Even though stocks are in " Red trading mode " as a result of being under their 21 ema's for time being ... I am going to possibly experiment with additional longs in commodities .



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