Correlation Between Nufarm Finance and Rio Tinto
Can any of the company-specific risk be diversified away by investing in both Nufarm Finance and Rio Tinto 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 Rio Tinto 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 Rio Tinto, you can compare the effects of market volatilities on Nufarm Finance and Rio Tinto 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 Rio Tinto. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm Finance and Rio Tinto.
Diversification Opportunities for Nufarm Finance and Rio Tinto
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nufarm and Rio is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Finance NZ and Rio Tinto in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rio Tinto 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 Rio Tinto. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rio Tinto has no effect on the direction of Nufarm Finance i.e., Nufarm Finance and Rio Tinto go up and down completely randomly.
Pair Corralation between Nufarm Finance and Rio Tinto
Assuming the 90 days trading horizon Nufarm Finance NZ is expected to generate 0.55 times more return on investment than Rio Tinto. However, Nufarm Finance NZ is 1.83 times less risky than Rio Tinto. It trades about 0.05 of its potential returns per unit of risk. Rio Tinto is currently generating about 0.01 per unit of risk. If you would invest 7,781 in Nufarm Finance NZ on October 13, 2024 and sell it today you would earn a total of 1,519 from holding Nufarm Finance NZ or generate 19.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nufarm Finance NZ vs. Rio Tinto
Performance |
| Timeline |
| Nufarm Finance NZ |
| Rio Tinto |
Nufarm Finance and Rio Tinto Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm Finance and Rio Tinto
The main advantage of trading using opposite Nufarm Finance and Rio Tinto positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm Finance position performs unexpectedly, Rio Tinto 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 Rio Tinto will offset losses from the drop in Rio Tinto's long position.| Nufarm Finance vs. Retail Food Group | Nufarm Finance vs. Flagship Investments | Nufarm Finance vs. Falcon Metals | Nufarm Finance vs. Centaurus Metals |
| Rio Tinto vs. EROAD | Rio Tinto vs. Nufarm Finance NZ | Rio Tinto vs. Black Rock Mining | Rio Tinto vs. Saferoads Holdings |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
Other Complementary Tools
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| ETFs Find actively traded Exchange Traded Funds (ETF) from around the world | |
| Cryptocurrency Center Build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency | |
| Risk-Return Analysis View associations between returns expected from investment and the risk you assume |