Correlation Between Nufarm and Weebit Nano
Can any of the company-specific risk be diversified away by investing in both Nufarm and Weebit Nano 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 Weebit Nano into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nufarm and Weebit Nano, you can compare the effects of market volatilities on Nufarm and Weebit Nano 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 Weebit Nano. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm and Weebit Nano.
Diversification Opportunities for Nufarm and Weebit Nano
0.46 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nufarm and Weebit is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm and Weebit Nano in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Weebit Nano 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 Weebit Nano. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Weebit Nano has no effect on the direction of Nufarm i.e., Nufarm and Weebit Nano go up and down completely randomly.
Pair Corralation between Nufarm and Weebit Nano
Assuming the 90 days trading horizon Nufarm is expected to under-perform the Weebit Nano. But the stock apears to be less risky and, when comparing its historical volatility, Nufarm is 2.98 times less risky than Weebit Nano. The stock trades about -0.02 of its potential returns per unit of risk. The Weebit Nano is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 191.00 in Weebit Nano on August 30, 2024 and sell it today you would earn a total of 76.00 from holding Weebit Nano or generate 39.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nufarm vs. Weebit Nano
Performance |
| Timeline |
| Nufarm |
| Weebit Nano |
Nufarm and Weebit Nano Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm and Weebit Nano
The main advantage of trading using opposite Nufarm and Weebit Nano positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm position performs unexpectedly, Weebit Nano 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 Weebit Nano will offset losses from the drop in Weebit Nano's long position.The idea behind Nufarm and Weebit Nano pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Weebit Nano vs. Autosports Group | Weebit Nano vs. Aristocrat Leisure | Weebit Nano vs. Computershare | Weebit Nano vs. Prime Financial 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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