CL vs CAD

[risknav]

Ahh but El Nino = warm and wet.

That’s very true, and meteorologists are expecting a strong occurrence this year, something the market hasn’t needed to deal with since 1997-98.

The big money question is however, how much is already priced in, and how strong will El Nino actually turn out to be.

Ideally, a market with high volatility within a narrow range would suit me just fine – pretty much like the last couple months.

 

[i960]

So first off if you're interested in establishing ratios, you need to establish notional value of one contract vs the other which will give you a good starting place (e.g. 2:1 CL/CD) - but *only* if the contracts are actually well correlated, and I'm not sure that's really the case. There's obviously some correlation but it's surely not 0.9+ all the time.