rudi

Adding Wood to Your Portolio: A Worthwhile Investment

DEL is also not a diversification to stocks. Its correlation with SPY is 0.66. There is no correlation to commodities.
I used data from around 12.11.2007 (listing of CUT) until today.

@mkreisel: as far as I know, the capital in ETFs is secured. Otherwise one would see deviations between different ETF providers, since the ETF price would include the risk of bankruptcy. e.g. YYY never showed such a behavior, when there were rumours about their situation.

Better look for some other interesting asset classes, not timber.

cheers
Rudi

Adding Wood to Your Portolio: A Worthwhile Investment

Hi,

I created the table stated below (I hope its not too screwed up), showing correlations of CUT and PCL to commodities and S&P500, based on daily returns.

Mind that CUT (0.68) and even more PCL (0.78) represent the movement of the stock market and are both not correlated with commodities as one would suspect.


CUT RJI RJN SPY PCL
CUT 1.00 0.22 0.07 0.68 0.48
RJI 0.22 1.00 0.89 0.02 -0.15
RJN 0.07 0.89 1.00 -0.09 -0.22
SPY 0.68 0.02 -0.09 1.00 0.78
PCL 0.48 -0.15 -0.22 0.78 1.00

I suggest to use RJI to diversify a portfolio. It includes 1% lumber, but I think that wood prices are anyhow highly correlated with the rest of RJI, especially oil and gas.

Where do you get historic data of wood prices?

Rudi