Analyzing Systematic Risks Associated with Financial Engineering Commodities

Abstract

This study investigates the relationship between systematic risks and future commodity contracts. This study concludes that interest rates, inflation rates, and currency exchange rates have a significant effect on commodity futures contracts (crude palm oil, gold, and tin). Apart from that, this study also includes the latest financial engineering derivatives, which is Futures Bitcoin, to examine the relationship between systematic risks. The results demonstrate that currency exchange rates are the most influential risk on future commodities and bitcoin. This study adds to the current literature of derivatives commodities and alerts regulators to the importance of establishment of fiscal and economic policies, particularly during the Covid 19 pandemic.