Correlation Between Nufarm Finance and ARN Media
Can any of the company-specific risk be diversified away by investing in both Nufarm Finance and ARN Media 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 Nufarm Finance and ARN Media into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nufarm Finance NZ and ARN Media Limited, you can compare the effects of market volatilities on Nufarm Finance and ARN Media 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 Nufarm Finance with a short position of ARN Media. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm Finance and ARN Media.
Diversification Opportunities for Nufarm Finance and ARN Media
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nufarm and ARN is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Finance NZ and ARN Media Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ARN Media Limited and Nufarm Finance 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 Nufarm Finance NZ are associated (or correlated) with ARN Media. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ARN Media Limited has no effect on the direction of Nufarm Finance i.e., Nufarm Finance and ARN Media go up and down completely randomly.
Pair Corralation between Nufarm Finance and ARN Media
Assuming the 90 days trading horizon Nufarm Finance is expected to generate 2.92 times less return on investment than ARN Media. But when comparing it to its historical volatility, Nufarm Finance NZ is 2.97 times less risky than ARN Media. It trades about 0.13 of its potential returns per unit of risk. ARN Media Limited is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest 59.00 in ARN Media Limited on September 3, 2024 and sell it today you would earn a total of 13.00 from holding ARN Media Limited or generate 22.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nufarm Finance NZ vs. ARN Media Limited
Performance |
| Timeline |
| Nufarm Finance NZ |
| ARN Media Limited |
Nufarm Finance and ARN Media Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm Finance and ARN Media
The main advantage of trading using opposite Nufarm Finance and ARN Media positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm Finance position performs unexpectedly, ARN Media 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 ARN Media will offset losses from the drop in ARN Media's long position.| Nufarm Finance vs. Champion Iron | Nufarm Finance vs. iShares Global Healthcare | Nufarm Finance vs. Peel Mining | Nufarm Finance vs. Australian Dairy Farms |
| ARN Media vs. Qbe Insurance Group | ARN Media vs. AiMedia Technologies | ARN Media vs. COAST ENTERTAINMENT HOLDINGS | ARN Media vs. Nufarm Finance NZ |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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