Correlation Between Nufarm and GAMESTOP
Can any of the company-specific risk be diversified away by investing in both Nufarm and GAMESTOP 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 GAMESTOP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nufarm Limited and GAMESTOP, you can compare the effects of market volatilities on Nufarm and GAMESTOP 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 GAMESTOP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm and GAMESTOP.
Diversification Opportunities for Nufarm and GAMESTOP
Very weak diversification
The 3 months correlation between Nufarm and GAMESTOP is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Limited and GAMESTOP in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GAMESTOP 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 GAMESTOP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GAMESTOP has no effect on the direction of Nufarm i.e., Nufarm and GAMESTOP go up and down completely randomly.
Pair Corralation between Nufarm and GAMESTOP
Assuming the 90 days horizon Nufarm Limited is expected to under-perform the GAMESTOP. But the stock apears to be less risky and, when comparing its historical volatility, Nufarm Limited is 3.7 times less risky than GAMESTOP. The stock trades about -0.07 of its potential returns per unit of risk. The GAMESTOP is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest 2,495 in GAMESTOP on September 2, 2024 and sell it today you would earn a total of 207.00 from holding GAMESTOP or generate 8.3% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nufarm Limited vs. GAMESTOP
Performance |
| Timeline |
| Nufarm Limited |
| GAMESTOP |
Nufarm and GAMESTOP Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm and GAMESTOP
The main advantage of trading using opposite Nufarm and GAMESTOP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm position performs unexpectedly, GAMESTOP 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 GAMESTOP will offset losses from the drop in GAMESTOP's long position.The idea behind Nufarm Limited and GAMESTOP 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.| GAMESTOP vs. SIVERS SEMICONDUCTORS AB | GAMESTOP vs. Darden Restaurants | GAMESTOP vs. Reliance Steel Aluminum | GAMESTOP vs. Q2M Managementberatung AG |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| My Watchlist Analysis Analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like | |
| Funds Screener Find actively-traded funds from around the world traded on over 30 global exchanges | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Fundamental Analysis View fundamental data based on most recent published financial statements |