The idea for this comparison of Oil to Big Macs, is that a Big Mac is representative of a basket of agricultural goods and thus compares the relative advantage of trading food for oil. Whats interesting about this is that theoretically, it should be a somewhat inflation-adjusted measure of oil prices. As of now it appears agricultural goods is undervalued relative to Oil.
Interesting to see how the plays out in a pairs trade?
Short Oil (USO United States Oil Fund LP)
Long Agriculture (RJA ELEMENTS – Rogers International Commodity Index Agriculture Total Return)
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