Correlation Between Nufarm and MotorCycle Holdings
Can any of the company-specific risk be diversified away by investing in both Nufarm and MotorCycle Holdings 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 and MotorCycle Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nufarm and MotorCycle Holdings, you can compare the effects of market volatilities on Nufarm and MotorCycle Holdings 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 with a short position of MotorCycle Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm and MotorCycle Holdings.
Diversification Opportunities for Nufarm and MotorCycle Holdings
-0.26 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nufarm and MotorCycle is -0.26. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm and MotorCycle Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on MotorCycle Holdings and Nufarm 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 are associated (or correlated) with MotorCycle Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of MotorCycle Holdings has no effect on the direction of Nufarm i.e., Nufarm and MotorCycle Holdings go up and down completely randomly.
Pair Corralation between Nufarm and MotorCycle Holdings
Assuming the 90 days trading horizon Nufarm is expected to generate 2.26 times more return on investment than MotorCycle Holdings. However, Nufarm is 2.26 times more volatile than MotorCycle Holdings. It trades about 0.11 of its potential returns per unit of risk. MotorCycle Holdings is currently generating about -0.09 per unit of risk. If you would invest 377.00 in Nufarm on August 29, 2024 and sell it today you would earn a total of 18.00 from holding Nufarm or generate 4.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nufarm vs. MotorCycle Holdings
Performance |
| Timeline |
| Nufarm |
| MotorCycle Holdings |
Nufarm and MotorCycle Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm and MotorCycle Holdings
The main advantage of trading using opposite Nufarm and MotorCycle Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm position performs unexpectedly, MotorCycle Holdings 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 MotorCycle Holdings will offset losses from the drop in MotorCycle Holdings' long position.| Nufarm vs. Northern Star Resources | Nufarm vs. Evolution Mining | Nufarm vs. Bluescope Steel | Nufarm vs. Sandfire Resources NL |
| MotorCycle Holdings vs. Aneka Tambang Tbk | MotorCycle Holdings vs. Macquarie Group | MotorCycle Holdings vs. Macquarie Group Ltd | MotorCycle Holdings vs. Challenger |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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