Correlation Between REVO INSURANCE and Nufarm
Can any of the company-specific risk be diversified away by investing in both REVO INSURANCE 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 REVO INSURANCE and Nufarm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between REVO INSURANCE SPA and Nufarm Limited, you can compare the effects of market volatilities on REVO INSURANCE 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 REVO INSURANCE with a short position of Nufarm. Check out your portfolio center. Please also check ongoing floating volatility patterns of REVO INSURANCE and Nufarm.
Diversification Opportunities for REVO INSURANCE and Nufarm
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between REVO and Nufarm is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding REVO INSURANCE SPA and Nufarm Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Limited and REVO INSURANCE 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 REVO INSURANCE SPA 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 REVO INSURANCE i.e., REVO INSURANCE and Nufarm go up and down completely randomly.
Pair Corralation between REVO INSURANCE and Nufarm
Assuming the 90 days horizon REVO INSURANCE SPA is expected to generate 0.63 times more return on investment than Nufarm. However, REVO INSURANCE SPA is 1.6 times less risky than Nufarm. It trades about 0.28 of its potential returns per unit of risk. Nufarm Limited is currently generating about -0.03 per unit of risk. If you would invest 998.00 in REVO INSURANCE SPA on September 3, 2024 and sell it today you would earn a total of 82.00 from holding REVO INSURANCE SPA or generate 8.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
REVO INSURANCE SPA vs. Nufarm Limited
Performance |
| Timeline |
| REVO INSURANCE SPA |
| Nufarm Limited |
REVO INSURANCE and Nufarm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with REVO INSURANCE and Nufarm
The main advantage of trading using opposite REVO INSURANCE and Nufarm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if REVO INSURANCE 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.| REVO INSURANCE vs. Diamondrock Hospitality Co | REVO INSURANCE vs. Mobilezone Holding AG | REVO INSURANCE vs. Cardinal Health | REVO INSURANCE vs. WillScot Mobile Mini |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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