Correlation Between Farm Pride and Nufarm Finance
Can any of the company-specific risk be diversified away by investing in both Farm Pride 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 Farm Pride and Nufarm Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Farm Pride Foods and Nufarm Finance NZ, you can compare the effects of market volatilities on Farm Pride 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 Farm Pride with a short position of Nufarm Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Farm Pride and Nufarm Finance.
Diversification Opportunities for Farm Pride and Nufarm Finance
0.35 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Farm and Nufarm is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Farm Pride Foods 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 Farm Pride 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 Farm Pride Foods 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 Farm Pride i.e., Farm Pride and Nufarm Finance go up and down completely randomly.
Pair Corralation between Farm Pride and Nufarm Finance
Assuming the 90 days trading horizon Farm Pride Foods is expected to generate 10.28 times more return on investment than Nufarm Finance. However, Farm Pride is 10.28 times more volatile than Nufarm Finance NZ. It trades about 0.09 of its potential returns per unit of risk. Nufarm Finance NZ is currently generating about -0.05 per unit of risk. If you would invest 13.00 in Farm Pride Foods on November 2, 2024 and sell it today you would earn a total of 1.00 from holding Farm Pride Foods or generate 7.69% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Farm Pride Foods vs. Nufarm Finance NZ
Performance |
Timeline |
Farm Pride Foods |
Nufarm Finance NZ |
Farm Pride and Nufarm Finance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Farm Pride and Nufarm Finance
The main advantage of trading using opposite Farm Pride and Nufarm Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Farm Pride 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.Farm Pride vs. Sequoia Financial Group | Farm Pride vs. Pure Foods Tasmania | Farm Pride vs. TPG Telecom | Farm Pride vs. Liberty Financial Group |
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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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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