I do not know what this "co-correlation" that you speak of is, and google doesn't seem to either. Assuming you are speaking about day-to-day correlation:
I don't know what futures you were thinking of, but financial futures (single stock, index futures, currency futures) track the base value EXACTLY (but also taking into account interest rates, dividends, etc). If this weren't the case, there would be an immediate arbitrage opportunity.
Specifically, once you factor the interest rate out, the DJIA future and the DJIA index are in sync within seconds. The HFT traders take care of that.
And while it is true that the market does trend occasionally (more than a coin flip), timing the start and end of the trade is empirically very hard.
If you know the market is trending, why don't you buy a future betting on the trending direction, with a stop at 2 ticks above and below your entry price? If the market is trending, you have positive winning expectation.
Except the market doesn't work that way - and if you think the market is trending when it isn't, you lose money with this scheme.
I don't know what futures you were thinking of, but financial futures (single stock, index futures, currency futures) track the base value EXACTLY (but also taking into account interest rates, dividends, etc). If this weren't the case, there would be an immediate arbitrage opportunity.
Specifically, once you factor the interest rate out, the DJIA future and the DJIA index are in sync within seconds. The HFT traders take care of that.
And while it is true that the market does trend occasionally (more than a coin flip), timing the start and end of the trade is empirically very hard.
If you know the market is trending, why don't you buy a future betting on the trending direction, with a stop at 2 ticks above and below your entry price? If the market is trending, you have positive winning expectation.
Except the market doesn't work that way - and if you think the market is trending when it isn't, you lose money with this scheme.