Correlation Between Nufarm and AVIS BUDGET
Can any of the company-specific risk be diversified away by investing in both Nufarm and AVIS BUDGET 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 AVIS BUDGET into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nufarm Limited and AVIS BUDGET GROUP, you can compare the effects of market volatilities on Nufarm and AVIS BUDGET 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 AVIS BUDGET. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm and AVIS BUDGET.
Diversification Opportunities for Nufarm and AVIS BUDGET
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Nufarm and AVIS is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Limited and AVIS BUDGET GROUP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on AVIS BUDGET GROUP 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 AVIS BUDGET. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of AVIS BUDGET GROUP has no effect on the direction of Nufarm i.e., Nufarm and AVIS BUDGET go up and down completely randomly.
Pair Corralation between Nufarm and AVIS BUDGET
Assuming the 90 days horizon Nufarm Limited is expected to under-perform the AVIS BUDGET. But the stock apears to be less risky and, when comparing its historical volatility, Nufarm Limited is 1.95 times less risky than AVIS BUDGET. The stock trades about -0.06 of its potential returns per unit of risk. The AVIS BUDGET GROUP is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 10,455 in AVIS BUDGET GROUP on August 31, 2024 and sell it today you would lose (150.00) from holding AVIS BUDGET GROUP or give up 1.43% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.23% |
| Values | Daily Returns |
Nufarm Limited vs. AVIS BUDGET GROUP
Performance |
| Timeline |
| Nufarm Limited |
| AVIS BUDGET GROUP |
Nufarm and AVIS BUDGET Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm and AVIS BUDGET
The main advantage of trading using opposite Nufarm and AVIS BUDGET positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm position performs unexpectedly, AVIS BUDGET 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 AVIS BUDGET will offset losses from the drop in AVIS BUDGET's long position.| Nufarm vs. FANDIFI TECHNOLOGY P | Nufarm vs. Major Drilling Group | Nufarm vs. Nordic Semiconductor ASA | Nufarm vs. PRECISION DRILLING P |
| AVIS BUDGET vs. The Hanover Insurance | AVIS BUDGET vs. LG Display Co | AVIS BUDGET vs. Singapore Reinsurance | AVIS BUDGET vs. PLAYWAY SA ZY 10 |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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