Tag Archives: expectational variance

Commodities: A Deeper Dive Into the Five Potential Sources of Return

In a prior post, we listed five components of returns that commodities futures can provide. In this post, we will delve deeper into each component. Insurance risk premium, according to Keynes’s theory, is earned when a market participant rolls their futures position and the price of the next futures contract is discounted against market expectations Read more […]

Commodities: Five Potential Sources of Return

Market participants have historically invested in commodity futures-based indices for their inflation protection and diversification benefits, given their low correlation to stocks and bonds. However, the returns earned from investing in commodities differ from those earned from traditional asset classes, in that commodities have no expected book value or expected cash flow, while a commodities’ Read more […]