What is the Baltic Dry?
This index is used as an indicator of economic strength. This index is quoted daily by the London-based Baltic Exchange. This index is not confined to just Baltic Sea countries, the index provides an assessment of the price of moving the major raw materials by sea.
Uses for the Baltic Dry
The Baltic index is commonly used as an economic indicator, this is due to it measuring the amount of raw product being shipped through it’s waters. With an increase in shipping could be interpreted as an increase in demand which could suggest a higher growth rate.
Risks of the Baltic Dry
The risks that can be associated with using the Baltic Dry as an indicator can be as simple as negative correlation to the anticipated move to a security. This could have an investor placing a position in the market that wouldn’t return as higher returns as expected.