Correlation Between Nufarm Finance and Step One
Can any of the company-specific risk be diversified away by investing in both Nufarm Finance and Step One 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 Step One 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 Step One Clothing, you can compare the effects of market volatilities on Nufarm Finance and Step One 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 Step One. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm Finance and Step One.
Diversification Opportunities for Nufarm Finance and Step One
-0.64 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between Nufarm and Step is -0.64. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Finance NZ and Step One Clothing in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Step One Clothing 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 Step One. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Step One Clothing has no effect on the direction of Nufarm Finance i.e., Nufarm Finance and Step One go up and down completely randomly.
Pair Corralation between Nufarm Finance and Step One
Assuming the 90 days trading horizon Nufarm Finance is expected to generate 11.12 times less return on investment than Step One. But when comparing it to its historical volatility, Nufarm Finance NZ is 6.63 times less risky than Step One. It trades about 0.06 of its potential returns per unit of risk. Step One Clothing is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 27.00 in Step One Clothing on August 31, 2024 and sell it today you would earn a total of 118.00 from holding Step One Clothing or generate 437.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nufarm Finance NZ vs. Step One Clothing
Performance |
| Timeline |
| Nufarm Finance NZ |
| Step One Clothing |
Nufarm Finance and Step One Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm Finance and Step One
The main advantage of trading using opposite Nufarm Finance and Step One positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm Finance position performs unexpectedly, Step One 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 Step One will offset losses from the drop in Step One's long position.| Nufarm Finance vs. Ecofibre | Nufarm Finance vs. iShares Global Healthcare | Nufarm Finance vs. Ridley | Nufarm Finance vs. Australian Dairy Farms |
| Step One vs. Aneka Tambang Tbk | Step One vs. Unibail Rodamco Westfield SE | Step One vs. Macquarie Group | Step One vs. Commonwealth Bank |
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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.
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