Correlation Between Aussie Broadband and Nufarm Finance
Can any of the company-specific risk be diversified away by investing in both Aussie Broadband and Nufarm Finance 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 Aussie Broadband and Nufarm Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aussie Broadband and Nufarm Finance NZ, you can compare the effects of market volatilities on Aussie Broadband and Nufarm Finance 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 Aussie Broadband with a short position of Nufarm Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aussie Broadband and Nufarm Finance.
Diversification Opportunities for Aussie Broadband and Nufarm Finance
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aussie and Nufarm is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Aussie Broadband and Nufarm Finance NZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Finance NZ and Aussie Broadband 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 Aussie Broadband are associated (or correlated) with Nufarm Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm Finance NZ has no effect on the direction of Aussie Broadband i.e., Aussie Broadband and Nufarm Finance go up and down completely randomly.
Pair Corralation between Aussie Broadband and Nufarm Finance
Assuming the 90 days trading horizon Aussie Broadband is expected to generate 3.29 times more return on investment than Nufarm Finance. However, Aussie Broadband is 3.29 times more volatile than Nufarm Finance NZ. It trades about 0.07 of its potential returns per unit of risk. Nufarm Finance NZ is currently generating about 0.01 per unit of risk. If you would invest 357.00 in Aussie Broadband on October 28, 2024 and sell it today you would earn a total of 8.00 from holding Aussie Broadband or generate 2.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aussie Broadband vs. Nufarm Finance NZ
Performance |
| Timeline |
| Aussie Broadband |
| Nufarm Finance NZ |
Aussie Broadband and Nufarm Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aussie Broadband and Nufarm Finance
The main advantage of trading using opposite Aussie Broadband and Nufarm Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aussie Broadband position performs unexpectedly, Nufarm Finance 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 Finance will offset losses from the drop in Nufarm Finance's long position.| Aussie Broadband vs. G8 Education | Aussie Broadband vs. Aeon Metals | Aussie Broadband vs. Maggie Beer Holdings | Aussie Broadband vs. Embark Education Group |
| Nufarm Finance vs. Global Health | Nufarm Finance vs. Hotel Property Investments | Nufarm Finance vs. MFF Capital Investments | Nufarm Finance vs. Flagship Investments |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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