CAN THE CONCEPT OF BETA CALCULATION BE APPLIED TO COMMODITY MARKETS AS WELL ?
EXAMPLE CONSIDERING ENERGY INDEX AS INDICE AND CRUDE , NATURAL GAS ETC AS INDIVIDUAL “companies” .
JUST A THOUGHT .
I believe calculation of Beta for commodities does not give any additional insights to trade.
First of all energy does not represent all commodities so it is not diversified and cannot eliminate unsystematic risk.
Very few components are there in energy index.
All individual components are positively correlated for most of the times so one can not find negative beta components to hedge.