Correlation Between Global Health and Nufarm Finance
Can any of the company-specific risk be diversified away by investing in both Global Health 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 Global Health and Nufarm Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Health and Nufarm Finance NZ, you can compare the effects of market volatilities on Global Health 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 Global Health with a short position of Nufarm Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Health and Nufarm Finance.
Diversification Opportunities for Global Health and Nufarm Finance
0.08 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Global and Nufarm is 0.08. Overlapping area represents the amount of risk that can be diversified away by holding Global Health 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 Global Health 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 Global Health 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 Global Health i.e., Global Health and Nufarm Finance go up and down completely randomly.
Pair Corralation between Global Health and Nufarm Finance
Assuming the 90 days trading horizon Global Health is expected to generate 7.01 times more return on investment than Nufarm Finance. However, Global Health is 7.01 times more volatile than Nufarm Finance NZ. It trades about 0.02 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 18.00 in Global Health on November 7, 2024 and sell it today you would lose (4.00) from holding Global Health or give up 22.22% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Health vs. Nufarm Finance NZ
Performance |
| Timeline |
| Global Health |
| Nufarm Finance NZ |
Global Health and Nufarm Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Health and Nufarm Finance
The main advantage of trading using opposite Global Health and Nufarm Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Health 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.| Global Health vs. Regis Healthcare | Global Health vs. Ainsworth Game Technology | Global Health vs. Centaurus Metals | Global Health vs. MetalsGrove Mining |
| Nufarm Finance vs. Carlton Investments | Nufarm Finance vs. Mirrabooka Investments | Nufarm Finance vs. Argo Investments | Nufarm Finance vs. Auctus Alternative 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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