How To Look For A Hedge With An Edge

One of the many folk we have spoken with about correlations is a CFO of a large Asian shipping company. A confounding problem for him: One of the cost centers that he has had a difficult time controlling (with reasonable cost) was hedging his fuel prices. The reason? Hedging in the commodities market can be expensive - and thus the reason why some companies decide to just roll the dice to see what happens with prices. Or only put on partial hedges.

But what if you had a much cheaper hedging option? Like a currency in the world's largest (and most liquid) financial market ($7.5 trillion trades every day). So that got the CFO's interest. But you need a currency that trades in the same direction as oil.

That's where Excalibur Pro comes in to play.

With our advanced correlation tools, you can quickly identify strong correlation relationships that can point to lower costing hedging options. Right now, CADUSD is a great option. The accompanying chart is showing a strong negative correlation between USDCAD and WTI - and that means a strong relationship between CADUSD and WTI.

Our correlation tools have many applications!