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hedging quistion

  • #1
  • First Post: Sep 1, 2007 4:47pm Sep 1, 2007 4:47pm
Hi, everyone
first i want to thank all the members of that forum for excllent information that you contribute with the other people, that a great help,

i was thinking about taking 2 oppisite positions, long (GBP/JPY) and short
(EUR/JPY) and collect the swap difference.
because there is a strong corealation between the 2 pairs, but i want to ask about the possiblile risk and what is the maximium difference or drawdown that i can face?
would u please help me?

thank you very much
  • #2
  • Edited 6:07pm Sep 1, 2007 5:34pm | Edited 6:07pm
Quoting tamer11
Hi, everyone
first i want to thank all the members of that forum for excllent information that you contribute with the other people, that a great help,

i was thinking about taking 2 oppisite positions, long (GBP/JPY) and short
(EUR/JPY) and collect the swap difference.
because there is a strong corealation between the 2 pairs, but i want to ask about the possiblile risk and what is the maximium difference or drawdown that i can face?
would u please help me?

thank you very much
What are you current calculations for the credit recieved for the GBPJPY and debit paid for the EURJPY?

What is the average daily move for the GBPJPY vs. the EURJPY?

Does your broker give you the entire credit or do they keep a little for themselves?

What is the current correlation between the pairs?
  • #3
  • Sep 2, 2007 3:03pm Sep 2, 2007 3:03pm
thank u philmcgrew for uyour reply,
i think the correlation between the 2 pairs is about 95 % , but i want to know the possible maximimum swing between them, will it be 100 pip or 200 pip or more, are anyome have coommemt or experince about that?

and there is something else i want to ask about it. if i go long (GBP/JPY) and go short (EUR/JPY) , is that mean i go short (EUR/GBP) ? if that was right, the daily average range of (EUR/GBP) is not so big.

can anyone help me about that?
thank u very much
  • #4
  • Last Post: Sep 3, 2007 12:22pm Sep 3, 2007 12:22pm
Quoting tamer11
thank u philmcgrew for uyour reply,
i think the correlation between the 2 pairs is about 95 % , but i want to know the possible maximimum swing between them, will it be 100 pip or 200 pip or more, are anyome have coommemt or experince about that?

and there is something else i want to ask about it. if i go long (GBP/JPY) and go short (EUR/JPY) , is that mean i go short (EUR/GBP) ? if that was right, the daily average range of (EUR/GBP) is not so big.

can anyone help me about that?
thank u very much
Yes. If you were short on eur/gbp it would be the same as a long gbp/jpy and short eur/jpy if you bought and sold the same number of units of each currency. If you look at the eur/gbp it does move less in percentage terms generally than gbp/jpy and should be fairly stable when the carry trades unwind.
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