Oil in Big Macs: Chart of the Day

Source: Gregor.us

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)

About these ads

0 Responses to “Oil in Big Macs: Chart of the Day”



  1. Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s





Follow

Get every new post delivered to your Inbox.

Join 39 other followers

%d bloggers like this: