In addressing LOS 38c, is the primary distinction between basis risk of Commodity Futures vs Financial Futures the fact that: - if you regress commodity return on commodity futures return, then regression coefficient provides a hedge ratio that minimises variance of hedged position BUT MAY NOT BE STABLE OVER TIME - if you regress stock return on index future return, the regression coefficient provides a hedge ratio that minimises variance of hedged position THAT IS STABLE OVER TIME ???
All it’s saying is that financial futures value moves less compared to commodities futures
I saw something on a Q bank question saying that commodity futures have more basis risk then financial futures because delivery may be required in different geographical areas…