Correlation Between Nufarm Finance and Pinnacle Investment
Can any of the company-specific risk be diversified away by investing in both Nufarm Finance and Pinnacle Investment 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 Pinnacle Investment 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 Pinnacle Investment Management, you can compare the effects of market volatilities on Nufarm Finance and Pinnacle Investment 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 Pinnacle Investment. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm Finance and Pinnacle Investment.
Diversification Opportunities for Nufarm Finance and Pinnacle Investment
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nufarm and Pinnacle is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Finance NZ and Pinnacle Investment Management in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pinnacle Investment 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 Pinnacle Investment. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pinnacle Investment has no effect on the direction of Nufarm Finance i.e., Nufarm Finance and Pinnacle Investment go up and down completely randomly.
Pair Corralation between Nufarm Finance and Pinnacle Investment
Assuming the 90 days trading horizon Nufarm Finance is expected to generate 12.98 times less return on investment than Pinnacle Investment. But when comparing it to its historical volatility, Nufarm Finance NZ is 2.06 times less risky than Pinnacle Investment. It trades about 0.04 of its potential returns per unit of risk. Pinnacle Investment Management is currently generating about 0.26 of returns per unit of risk over similar time horizon. If you would invest 1,301 in Pinnacle Investment Management on August 27, 2024 and sell it today you would earn a total of 1,029 from holding Pinnacle Investment Management or generate 79.09% 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. Pinnacle Investment Management
Performance |
| Timeline |
| Nufarm Finance NZ |
| Pinnacle Investment |
Nufarm Finance and Pinnacle Investment Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm Finance and Pinnacle Investment
The main advantage of trading using opposite Nufarm Finance and Pinnacle Investment positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm Finance position performs unexpectedly, Pinnacle Investment 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 Pinnacle Investment will offset losses from the drop in Pinnacle Investment's long position.| Nufarm Finance vs. Westpac Banking | Nufarm Finance vs. Ecofibre | Nufarm Finance vs. iShares Global Healthcare | Nufarm Finance vs. Ridley |
| Pinnacle Investment vs. Hutchison Telecommunications | Pinnacle Investment vs. Eagle Mountain Mining | Pinnacle Investment vs. Sky Metals | Pinnacle Investment 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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