Correlation Between Nufarm Finance and Cochlear
Can any of the company-specific risk be diversified away by investing in both Nufarm Finance and Cochlear 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 Cochlear 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 Cochlear, you can compare the effects of market volatilities on Nufarm Finance and Cochlear 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 Cochlear. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm Finance and Cochlear.
Diversification Opportunities for Nufarm Finance and Cochlear
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nufarm and Cochlear is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Finance NZ and Cochlear in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cochlear 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 Cochlear. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cochlear has no effect on the direction of Nufarm Finance i.e., Nufarm Finance and Cochlear go up and down completely randomly.
Pair Corralation between Nufarm Finance and Cochlear
Assuming the 90 days trading horizon Nufarm Finance NZ is expected to generate 0.12 times more return on investment than Cochlear. However, Nufarm Finance NZ is 8.01 times less risky than Cochlear. It trades about 0.17 of its potential returns per unit of risk. Cochlear is currently generating about -0.22 per unit of risk. If you would invest 9,300 in Nufarm Finance NZ on November 28, 2024 and sell it today you would earn a total of 149.00 from holding Nufarm Finance NZ or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Nufarm Finance NZ vs. Cochlear
Performance |
| Timeline |
| Nufarm Finance NZ |
| Cochlear |
Nufarm Finance and Cochlear Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm Finance and Cochlear
The main advantage of trading using opposite Nufarm Finance and Cochlear positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm Finance position performs unexpectedly, Cochlear 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 Cochlear will offset losses from the drop in Cochlear's long position.| Nufarm Finance vs. Land Homes Group | Nufarm Finance vs. Aussie Broadband | Nufarm Finance vs. Carlton Investments | Nufarm Finance vs. Clime Investment Management |
| Cochlear vs. Ras Technology Holdings | Cochlear vs. Energy Technologies Limited | Cochlear vs. Dug Technology | Cochlear vs. Advanced Braking Technology |
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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