Correlation Between Iluka Resources and Nufarm
Can any of the company-specific risk be diversified away by investing in both Iluka Resources 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 Iluka Resources and Nufarm into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Iluka Resources and Nufarm, you can compare the effects of market volatilities on Iluka Resources 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 Iluka Resources with a short position of Nufarm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Iluka Resources and Nufarm.
Diversification Opportunities for Iluka Resources and Nufarm
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Iluka and Nufarm is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Iluka Resources and Nufarm in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm and Iluka Resources 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 Iluka Resources 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 has no effect on the direction of Iluka Resources i.e., Iluka Resources and Nufarm go up and down completely randomly.
Pair Corralation between Iluka Resources and Nufarm
Assuming the 90 days trading horizon Iluka Resources is expected to under-perform the Nufarm. In addition to that, Iluka Resources is 1.62 times more volatile than Nufarm. It trades about -0.1 of its total potential returns per unit of risk. Nufarm is currently generating about -0.06 per unit of volatility. If you would invest 409.00 in Nufarm on November 18, 2024 and sell it today you would lose (26.00) from holding Nufarm or give up 6.36% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Iluka Resources vs. Nufarm
Performance |
| Timeline |
| Iluka Resources |
| Nufarm |
Iluka Resources and Nufarm Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Iluka Resources and Nufarm
The main advantage of trading using opposite Iluka Resources and Nufarm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iluka Resources 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.| Iluka Resources vs. Ainsworth Game Technology | Iluka Resources vs. Complii FinTech Solutions | Iluka Resources vs. Readytech Holdings | Iluka Resources vs. Pinnacle Investment Management |
| Nufarm vs. Mirrabooka Investments | Nufarm vs. G8 Education | Nufarm vs. Hotel Property Investments | Nufarm vs. Platinum Asia 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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