Correlation Between Nufarm Finance and Collins Foods
Can any of the company-specific risk be diversified away by investing in both Nufarm Finance and Collins Foods 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 Collins Foods 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 Collins Foods, you can compare the effects of market volatilities on Nufarm Finance and Collins Foods 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 Collins Foods. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm Finance and Collins Foods.
Diversification Opportunities for Nufarm Finance and Collins Foods
0.02 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Nufarm and Collins is 0.02. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Finance NZ and Collins Foods in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Collins Foods 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 Collins Foods. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Collins Foods has no effect on the direction of Nufarm Finance i.e., Nufarm Finance and Collins Foods go up and down completely randomly.
Pair Corralation between Nufarm Finance and Collins Foods
Assuming the 90 days trading horizon Nufarm Finance NZ is expected to generate 0.43 times more return on investment than Collins Foods. However, Nufarm Finance NZ is 2.31 times less risky than Collins Foods. It trades about 0.04 of its potential returns per unit of risk. Collins Foods is currently generating about -0.08 per unit of risk. If you would invest 8,486 in Nufarm Finance NZ on September 14, 2024 and sell it today you would earn a total of 674.00 from holding Nufarm Finance NZ or generate 7.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nufarm Finance NZ vs. Collins Foods
Performance |
| Timeline |
| Nufarm Finance NZ |
| Collins Foods |
Nufarm Finance and Collins Foods Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm Finance and Collins Foods
The main advantage of trading using opposite Nufarm Finance and Collins Foods positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm Finance position performs unexpectedly, Collins Foods 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 Collins Foods will offset losses from the drop in Collins Foods' long position.| Nufarm Finance vs. Australian Unity Office | Nufarm Finance vs. Leeuwin Metals | Nufarm Finance vs. Catalyst Metals | Nufarm Finance vs. Group 6 Metals |
| Collins Foods vs. Tombador Iron | Collins Foods vs. Cleanaway Waste Management | Collins Foods vs. Farm Pride Foods | Collins Foods vs. RLF AgTech |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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