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| HYBRID COMMODITIES PRACTICE / Practice Disciplines / Energy and Metals |
| Petroleum products, natural gas, base and precious metals. Hybrid has developed models for pricing contingent claims on petroleum products (e.g., crude oil, heating oil, gasoline), natural gas, and base and precious metals that capture salient features of these products' price dynamics. In particular, theory and empirical evidence demonstrate that price volatilities and the correlations between different points on forward curves for these commodities depend on supply and demand conditions. This implies that price volatilities and correlations for these commodities should be price-dependent. Hybrid has sophisticated methods for extracting the price-volatility-correlation relation implied by quoted forward, futures, swap, and option prices. We also have the techniques and methodologies to price structured multi-commodity derivatives based on the correlation analysis of the components of these structures. This information can be used to identify profitable trading opportunities and to improve management of energy and metals price, volatility, correlation, and volume risk exposures. |