Convergence

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Related to Convergence zone: Intertropical Convergence Zone

Convergence

The movement of the price of a futures contract toward the price of the underlying cash commodity. At the start, the contract price is usually higher because of time value. But as the contract nears expiration, and time value decreases, the futures price and the cash price converge. More generally, convergence trading involves taking two related assets that have different prices with the expectation that prices will converge (the cheaper asset is purchased and the more expensive is sold short).
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Convergence

The fact that the futures price and the spot price for a given asset approach one another as a futures contract on that asset approaches maturity. At maturity, the two prices should be equal. The existence of convergence is the basis for the theory that forward rates equal future spot rates, though this idea is more controversial.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

convergence

The process by which the futures price and the cash price of an underlying asset approach one another as delivery date nears. The futures and cash prices should be equal on the delivery date.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
The Intertropical Convergence Zone (ITCZ) will bring light to moderate rains to Visayas and Mindanao, the Philippine Atmospheric, Geophysical, and Astronomical Services Administration (PAGASA) said, September 19, 2015.
The Intertropical Convergence Zone (ITCZ) will affect Mindanao and Palawan areas on Sunday, the Philippine Atmospheric, Geophysical and Astronomical Services Administration (Pagasa) said.
In its forecast on Tuesday morning, Pagasa said parts of Visayas and Mindanao would also experience scattered rains and thunderstorms due to the Intertropical Convergence Zone (ITCZ).
The low pressure area (LPA) near Mindanao combined with the intertropical convergence zone will bring overcast skies and scattered rains over Eastern Visayas, Caraga, and Davao region, according to Pagasa.

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