Correlation Between Nufarm Finance and Sky Metals
Can any of the company-specific risk be diversified away by investing in both Nufarm Finance and Sky Metals 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 Sky Metals 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 Sky Metals, you can compare the effects of market volatilities on Nufarm Finance and Sky Metals 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 Sky Metals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm Finance and Sky Metals.
Diversification Opportunities for Nufarm Finance and Sky Metals
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nufarm and Sky is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Finance NZ and Sky Metals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sky Metals 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 Sky Metals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sky Metals has no effect on the direction of Nufarm Finance i.e., Nufarm Finance and Sky Metals go up and down completely randomly.
Pair Corralation between Nufarm Finance and Sky Metals
Assuming the 90 days trading horizon Nufarm Finance NZ is expected to generate 0.15 times more return on investment than Sky Metals. However, Nufarm Finance NZ is 6.71 times less risky than Sky Metals. It trades about 0.26 of its potential returns per unit of risk. Sky Metals is currently generating about -0.05 per unit of risk. If you would invest 9,040 in Nufarm Finance NZ on September 1, 2024 and sell it today you would earn a total of 310.00 from holding Nufarm Finance NZ or generate 3.43% 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. Sky Metals
Performance |
| Timeline |
| Nufarm Finance NZ |
| Sky Metals |
Nufarm Finance and Sky Metals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm Finance and Sky Metals
The main advantage of trading using opposite Nufarm Finance and Sky Metals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm Finance position performs unexpectedly, Sky Metals 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 Sky Metals will offset losses from the drop in Sky Metals' long position.| Nufarm Finance vs. Ecofibre | Nufarm Finance vs. iShares Global Healthcare | Nufarm Finance vs. Ridley | Nufarm Finance vs. Australian Dairy Farms |
| Sky Metals vs. Carnegie Clean Energy | Sky Metals vs. Nufarm Finance NZ | Sky Metals vs. Richmond Vanadium Technology | Sky Metals vs. Macquarie Technology Group |
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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..
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