Correlation Between Nufarm and Copa Holdings
Can any of the company-specific risk be diversified away by investing in both Nufarm and Copa 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 Copa Holdings into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nufarm Limited and Copa Holdings SA, you can compare the effects of market volatilities on Nufarm and Copa 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 Copa Holdings. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm and Copa Holdings.
Diversification Opportunities for Nufarm and Copa Holdings
0.2 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Nufarm and Copa is 0.2. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Limited and Copa Holdings SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Copa Holdings SA 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 Limited are associated (or correlated) with Copa Holdings. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Copa Holdings SA has no effect on the direction of Nufarm i.e., Nufarm and Copa Holdings go up and down completely randomly.
Pair Corralation between Nufarm and Copa Holdings
Assuming the 90 days horizon Nufarm Limited is expected to generate 1.0 times more return on investment than Copa Holdings. However, Nufarm is 1.0 times more volatile than Copa Holdings SA. It trades about 0.15 of its potential returns per unit of risk. Copa Holdings SA is currently generating about 0.05 per unit of risk. If you would invest 208.00 in Nufarm Limited on November 29, 2024 and sell it today you would earn a total of 12.00 from holding Nufarm Limited or generate 5.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nufarm Limited vs. Copa Holdings SA
Performance |
| Timeline |
| Nufarm Limited |
| Copa Holdings SA |
Nufarm and Copa Holdings Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm and Copa Holdings
The main advantage of trading using opposite Nufarm and Copa Holdings positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm position performs unexpectedly, Copa 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 Copa Holdings will offset losses from the drop in Copa Holdings' long position.| Nufarm vs. SIDETRADE EO 1 | Nufarm vs. AUTO TRADER ADR | Nufarm vs. CSSC Offshore Marine | Nufarm vs. Fast Retailing Co |
| Copa Holdings vs. INTERSHOP Communications Aktiengesellschaft | Copa Holdings vs. GAMING FAC SA | Copa Holdings vs. Singapore Telecommunications Limited | Copa Holdings vs. COMBA TELECOM SYST |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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