Intermarket Analysis & Asset Allocation Flashcards
6 cards from real CTA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 6 Intermarket Analysis & Asset Allocation flashcards as text
What is the 'CRB Index' and how is it used in intermarket analysis?
Answer: The Commodity Research Bureau Index, a broad commodity price benchmark used to gauge inflationary pressure in intermarket analysis
The CRB Index tracks a basket of commodity prices across multiple sectors and is widely used as a barometer of global inflationary trends, with implications for bond and equity markets.
In the context of currency analysis, a rising domestic currency generally has what effect on a country's exporters?
Answer: It makes exports more expensive for foreign buyers, potentially hurting export-oriented company revenues
When a country's currency strengthens, its goods become more expensive in foreign markets, which can reduce demand for exports and translate foreign revenues into fewer domestic currency units.
What is 'beta' in the context of relative performance and portfolio analysis?
Answer: A measure of a security's sensitivity to movements in a benchmark index (systematic risk)
Beta measures how much a security is expected to move relative to a benchmark — a beta above 1 indicates amplified market movements, while below 1 suggests lower sensitivity to market swings.
In intermarket analysis, emerging market equities tend to perform best when:
Answer: The US Dollar is weakening, commodity prices are rising, and global growth expectations are increasing
Emerging markets benefit from a weaker dollar (reduces debt burden), rising commodities (many EM economies are commodity exporters), and improving global growth expectations that attract capital flows.
The 'risk-on / risk-off' (RORO) framework in intermarket analysis describes:
Answer: The tendency for markets to shift between appetite for higher-risk assets (equities, commodities, high-yield bonds) and a flight to safety assets (Treasuries, gold, USD)
The RORO framework captures how global investors rotate between risk-seeking assets (equities, EM, commodities) and risk-averse assets (US Treasuries, JPY, CHF, gold) based on sentiment shifts.
What does the 'copper/gold ratio' indicate in intermarket analysis?
Answer: A signal for economic growth expectations — rising ratio suggests strong growth, falling ratio suggests risk-off or slowing growth
Copper is an economically sensitive industrial metal while gold is a safe-haven asset — a rising copper/gold ratio signals economic optimism and often correlates with rising bond yields.