Correlation Between Nufarm Finance and WiseTech Global
Can any of the company-specific risk be diversified away by investing in both Nufarm Finance and WiseTech Global 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 WiseTech Global 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 WiseTech Global Limited, you can compare the effects of market volatilities on Nufarm Finance and WiseTech Global 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 WiseTech Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm Finance and WiseTech Global.
Diversification Opportunities for Nufarm Finance and WiseTech Global
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nufarm and WiseTech is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Finance NZ and WiseTech Global Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on WiseTech Global 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 WiseTech Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of WiseTech Global has no effect on the direction of Nufarm Finance i.e., Nufarm Finance and WiseTech Global go up and down completely randomly.
Pair Corralation between Nufarm Finance and WiseTech Global
Assuming the 90 days trading horizon Nufarm Finance NZ is expected to under-perform the WiseTech Global. But the stock apears to be less risky and, when comparing its historical volatility, Nufarm Finance NZ is 3.09 times less risky than WiseTech Global. The stock trades about -0.05 of its potential returns per unit of risk. The WiseTech Global Limited is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 12,389 in WiseTech Global Limited on November 3, 2024 and sell it today you would lose (8.00) from holding WiseTech Global Limited or give up 0.06% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nufarm Finance NZ vs. WiseTech Global Limited
Performance |
| Timeline |
| Nufarm Finance NZ |
| WiseTech Global |
Nufarm Finance and WiseTech Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm Finance and WiseTech Global
The main advantage of trading using opposite Nufarm Finance and WiseTech Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm Finance position performs unexpectedly, WiseTech Global 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 WiseTech Global will offset losses from the drop in WiseTech Global's long position.| Nufarm Finance vs. Aneka Tambang Tbk | Nufarm Finance vs. BHP Group Limited | Nufarm Finance vs. Ecofibre | Nufarm Finance vs. iShares Global Healthcare |
| WiseTech Global vs. Aneka Tambang Tbk | WiseTech Global vs. Rio Tinto | WiseTech Global vs. BHP Group Limited | WiseTech Global vs. Block Inc |
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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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