Correlation Between Federal Agricultural and Nufarm
Can any of the company-specific risk be diversified away by investing in both Federal Agricultural and Nufarm at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Federal Agricultural and Nufarm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federal Agricultural Mortgage and Nufarm Limited, you can compare the effects of market volatilities on Federal Agricultural and Nufarm and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Federal Agricultural with a short position of Nufarm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federal Agricultural and Nufarm.
Diversification Opportunities for Federal Agricultural and Nufarm
0.56 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Federal and Nufarm is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Federal Agricultural Mortgage and Nufarm Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Limited and Federal Agricultural is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Federal Agricultural Mortgage are associated (or correlated) with Nufarm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm Limited has no effect on the direction of Federal Agricultural i.e., Federal Agricultural and Nufarm go up and down completely randomly.
Pair Corralation between Federal Agricultural and Nufarm
Assuming the 90 days horizon Federal Agricultural Mortgage is expected to generate 0.91 times more return on investment than Nufarm. However, Federal Agricultural Mortgage is 1.1 times less risky than Nufarm. It trades about 0.13 of its potential returns per unit of risk. Nufarm Limited is currently generating about 0.1 per unit of risk. If you would invest 18,600 in Federal Agricultural Mortgage on November 28, 2024 and sell it today you would earn a total of 900.00 from holding Federal Agricultural Mortgage or generate 4.84% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Federal Agricultural Mortgage vs. Nufarm Limited
Performance |
| Timeline |
| Federal Agricultural |
| Nufarm Limited |
Federal Agricultural and Nufarm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Federal Agricultural and Nufarm
The main advantage of trading using opposite Federal Agricultural and Nufarm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Federal Agricultural position performs unexpectedly, Nufarm can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Nufarm will offset losses from the drop in Nufarm's long position.| Federal Agricultural vs. RCS Mediagroup SpA | Federal Agricultural vs. CNVISION MEDIA | Federal Agricultural vs. Universal Entertainment | Federal Agricultural vs. Aegean Airlines SA |
| Nufarm vs. Cleanaway Waste Management | Nufarm vs. CALTAGIRONE EDITORE | Nufarm vs. CSSC Offshore Marine | Nufarm vs. CVW CLEANTECH INC |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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