Assessing differences between commodity futures and stocks of commodity companies during inflation.

摘要

The growing consumption of raw materials in developing economies of countries like China, India, Russia, and Brazil has the commodity futures market growing significantly over the next decade (Doyle et al., 2007). However, Conte and Karr (2001) estimated that 90 percent of small commodities traders lose money in a volatile market, which suggests that investors will indirectly lose money, too. The focus of the study is to address the problem of efficiently diversifying a portfolio during inflationary periods, without the risk of commodity futures. A quantitative study was used to compare the performance of stocks from commodity companies with commodity futures during unexpected or expected inflationary periods. The results indicated that stocks from commodity companies had a higher average rate of returns during expected inflationary periods then, commodities futures. Whereas, stocks from commodity companies did not have a higher average rate of returns then commodities futures during unexpected inflationary periods. The results of the study might provide information to investors that have a problem investing in the commodity futures market. As well as, providing information to investors interested in diversifying their portfolios during inflationary periods without the risk of commodity futures.