This research examines the ability of firms to utilize the existing primary U.S. metal futures markets indecreasing variability of spot metal positions. The focus of the analysis is on those twenty‐one U.S. cash metals listed in the Wall Street Journal which have an intrinsicrelation with (at least) one of the six primary metal futures markets.Hedging is deemed effective if variance of hedged returns is significantly lower than the cash‐postion return variance. Both risk‐minimizing and “naive” futures hedge postions are analyzed. On a realized return basis the direct off setting hedges prove to be effective in almost 93 percent of the forty‐two comparisons examined.
Meyer, T. (1994), "Naive Versus Minimum‐Risk Direct Hedging of Cash Metal Prices Using U.S. Metal Futures Markets", American Journal of Business, Vol. 9 No. 2, pp. 39-46. https://doi.org/10.1108/19355181199400012Download as .RIS
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