Correlation Between Nufarm and State Bank
Can any of the company-specific risk be diversified away by investing in both Nufarm and State Bank 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 State Bank into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nufarm Limited and State Bank of, you can compare the effects of market volatilities on Nufarm and State Bank 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 State Bank. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm and State Bank.
Diversification Opportunities for Nufarm and State Bank
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nufarm and State is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Limited and State Bank of in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Bank 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 State Bank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Bank has no effect on the direction of Nufarm i.e., Nufarm and State Bank go up and down completely randomly.
Pair Corralation between Nufarm and State Bank
Assuming the 90 days horizon Nufarm Limited is expected to under-perform the State Bank. In addition to that, Nufarm is 1.11 times more volatile than State Bank of. It trades about -0.39 of its total potential returns per unit of risk. State Bank of is currently generating about 0.14 per unit of volatility. If you would invest 9,050 in State Bank of on September 19, 2024 and sell it today you would earn a total of 400.00 from holding State Bank of or generate 4.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nufarm Limited vs. State Bank of
Performance |
| Timeline |
| Nufarm Limited |
| State Bank |
Nufarm and State Bank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm and State Bank
The main advantage of trading using opposite Nufarm and State Bank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm position performs unexpectedly, State Bank 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 State Bank will offset losses from the drop in State Bank's long position.| Nufarm vs. Superior Plus Corp | Nufarm vs. SIVERS SEMICONDUCTORS AB | Nufarm vs. NorAm Drilling AS | Nufarm vs. Norsk Hydro ASA |
| State Bank vs. Gamma Communications plc | State Bank vs. Nufarm Limited | State Bank vs. Highlight Communications AG | State Bank vs. Daito Trust Construction |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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