Correlation Between Ecofibre and Nufarm Finance
Can any of the company-specific risk be diversified away by investing in both Ecofibre 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 Ecofibre and Nufarm Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ecofibre and Nufarm Finance NZ, you can compare the effects of market volatilities on Ecofibre 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 Ecofibre with a short position of Nufarm Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ecofibre and Nufarm Finance.
Diversification Opportunities for Ecofibre and Nufarm Finance
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Ecofibre and Nufarm is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Ecofibre 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 Ecofibre 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 Ecofibre 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 Ecofibre i.e., Ecofibre and Nufarm Finance go up and down completely randomly.
Pair Corralation between Ecofibre and Nufarm Finance
Assuming the 90 days trading horizon Ecofibre is expected to generate 9.14 times more return on investment than Nufarm Finance. However, Ecofibre is 9.14 times more volatile than Nufarm Finance NZ. It trades about 0.16 of its potential returns per unit of risk. Nufarm Finance NZ is currently generating about 0.1 per unit of risk. If you would invest 2.10 in Ecofibre on August 31, 2024 and sell it today you would earn a total of 1.90 from holding Ecofibre or generate 90.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ecofibre vs. Nufarm Finance NZ
Performance |
| Timeline |
| Ecofibre |
| Nufarm Finance NZ |
Ecofibre and Nufarm Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ecofibre and Nufarm Finance
The main advantage of trading using opposite Ecofibre and Nufarm Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ecofibre 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.| Ecofibre vs. Aussie Broadband | Ecofibre vs. Kneomedia | Ecofibre vs. Queste Communications | Ecofibre vs. AiMedia Technologies |
| Nufarm Finance vs. Ecofibre | Nufarm Finance vs. iShares Global Healthcare | Nufarm Finance vs. Ridley | Nufarm Finance vs. Australian Dairy Farms |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Equity Valuation Check real value of public entities based on technical and fundamental data | |
| Idea Analyzer Analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments |