EBF 301
Global Finance for the Earth, Energy, and Materials Industries

Summary and Final Tasks

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Key Learning Points: Lesson 8

  1. Variation of a parameter such as price data is an important factor in risk management. 
  2. A commodity with high price variation is considered a high risk investment.
  3. Volatility is a term for measuring the dispersion and variation.
  4. Standard deviation can be used as a measure of volatility.
  5. The moving standard deviation is the standard deviation calculated for a moving window of data.
  6. One measure for calculating volatility is the moving (rolling) standard deviation for the changes of price (return).
  7. Price change can be calculated using an arithmetic method or using the natural log method (return).
  8. Exponentially weighted volatility uses a decay factor, λ, to apply higher weights to the more recent data.
  9. Relative Volatility Index is another measure of volatility.
  10. Correlation is a measure of the strength of the linear relationship between two quantitative variables.
  11. A strong correlation between spot and futures market prices makes the hedging efficient.

Over the past few weeks, you have been researching various Fundamental Factors that can be used to aid in making trading decisions. In the next two lessons, we will explore quantitative methods and price analysis. The other type of information, used by "day traders," is Technical Analysis. In the next lesson, we will get an elementary overview of Technical Analysis.

Activities

  1. ​​​​Lesson 8 Quiz
  2. Lesson 8 Price Analysis Activity
  3. Fundamental Factors

Reminder - Complete all of the lesson tasks!

You have reached the end of this lesson. Double-check the list of requirements on the first page of this lesson to make sure you have completed all of the activities listed there before beginning the next lesson.