Peer-Reviewed Journal Details
Mandatory Fields
KENNEALLY, M,CRONIN, D;
1994
January
Economy and Society
DYNAMIC HEDGING WITH THE IFOX LONG GILT FUTURES - NEW EVIDENCE
Validated
()
Optional Fields
AUTOREGRESSIVE TIME-SERIES COINTEGRATION VECTORS UNIT-ROOT
25
135
155
This paper assesses the hedging effectiveness of the IFOX long gilt futures contract. The paper builds on earlier work by Hogan which was hindered by small sample size, thin trading and incomplete specification of the data generation process. We establish that spot and futures long gilt prices are cointegrated and hence have an error correction representation. We test a number of nested sub-models and find some support for the contention that equilibrium spot and futures are unit elastic. The hedging effectiveness of the futures contract is high, and dynamic hedging strategies which enhance effectiveness are established.
Grant Details