Correlation Between MFF Capital and Nufarm Finance
Can any of the company-specific risk be diversified away by investing in both MFF Capital 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 MFF Capital and Nufarm Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between MFF Capital Investments and Nufarm Finance NZ, you can compare the effects of market volatilities on MFF Capital 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 MFF Capital with a short position of Nufarm Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of MFF Capital and Nufarm Finance.
Diversification Opportunities for MFF Capital and Nufarm Finance
0.72 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MFF and Nufarm is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding MFF Capital Investments 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 MFF Capital 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 MFF Capital Investments 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 MFF Capital i.e., MFF Capital and Nufarm Finance go up and down completely randomly.
Pair Corralation between MFF Capital and Nufarm Finance
Assuming the 90 days trading horizon MFF Capital is expected to generate 2.53 times less return on investment than Nufarm Finance. But when comparing it to its historical volatility, MFF Capital Investments is 1.79 times less risky than Nufarm Finance. It trades about 0.08 of its potential returns per unit of risk. Nufarm Finance NZ is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 9,101 in Nufarm Finance NZ on October 14, 2024 and sell it today you would earn a total of 199.00 from holding Nufarm Finance NZ or generate 2.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
MFF Capital Investments vs. Nufarm Finance NZ
Performance |
| Timeline |
| MFF Capital Investments |
| Nufarm Finance NZ |
MFF Capital and Nufarm Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with MFF Capital and Nufarm Finance
The main advantage of trading using opposite MFF Capital and Nufarm Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if MFF Capital 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.| MFF Capital vs. Truscott Mining Corp | MFF Capital vs. Stelar Metals | MFF Capital vs. Healthco Healthcare and | MFF Capital vs. Sonic Healthcare |
| Nufarm Finance vs. MFF Capital Investments | Nufarm Finance vs. Aussie Broadband | Nufarm Finance vs. Duxton Broadacre Farms | Nufarm Finance vs. Djerriwarrh 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
Other Complementary Tools
| Competition Analyzer Analyze and compare many basic indicators for a group of related or unrelated entities | |
| Bond Analysis Evaluate and analyze corporate bonds as a potential investment for your portfolios. | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Pair Correlation Compare performance and examine fundamental relationship between any two equity instruments | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |