Minimizing the variance of the coverage ratio as an approach to optimize the exchange rate risk of Brent futures contracts

Derivatives markets show that their structure is always characterized by periods of strong price fluctuations. This true regardless the underlying asset futures contracts considered, whether they are commodities, interest rates, exchange shares, stock market indices, etc. By locking in future prices, primary objective these to limit risks faced operators. article proposes a new method optimizing coverage ratio minimize variance and thus apply this technique reduce risk associated with Brent volatility for period from January 2010 December 2020. The minimization model Ederington's (1979) first most widely used one dominates literature on area which helps find optimal ratio, also function our particle assay optimization algorithm MATLAB we will better interpret results statistical analysis lastly, evaluate effectiveness model.