What’s the “price” of weather volatility in your portfolio?

by Artemis on October 28, 2008

Every so often I come across research papers that I just want to share with the Artemis readership and today I received a press release for a particularly apt one given the current financial climate.

Weather Trends International have released a paper on weather trading and it’s correlation to financial market swings titled ‘What’s the “price” of weather volatility in your portfolio?

The press release says:

Weather Trends International, the global leader in year-ahead business weather guidance in retail, manufacturing, agriculture, energy and the financial sectors released a recent study on the use of long range forecast modeling and the trading of weather futures

The research team simulated trading (weather and natural gas futures) to prove that accurate proprietary forecast guidance (forecasted year ahead) can be profitably traded when employed correctly over a one to eleven month time horizon.

WTI’s team of experts from the financial and weather industry provides tools and guidance to help traders better manage volatility associated with unseasonable changes in weather and the effects on equities and futures as well as commodities.

While being a good advert for Weather Trends themselves this is also a great piece of advertising for the weather trading marketplace as a whole (as well as being a great primer on weather risk trading). Given the particularly low amount of market news lately we could do with a few of these studies gaining a little traction amongst the financial community to help promote weather instruments positively.

You can read the full press release here and download the paper in PDF format here.

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