Correlation Between Nufarm and BJs Restaurants
Can any of the company-specific risk be diversified away by investing in both Nufarm and BJs Restaurants 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 BJs Restaurants into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nufarm Limited and BJs Restaurants, you can compare the effects of market volatilities on Nufarm and BJs Restaurants 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 BJs Restaurants. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm and BJs Restaurants.
Diversification Opportunities for Nufarm and BJs Restaurants
-0.1 | Correlation Coefficient |
Good diversification
The 3 months correlation between Nufarm and BJs is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Limited and BJs Restaurants in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BJs Restaurants 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 BJs Restaurants. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BJs Restaurants has no effect on the direction of Nufarm i.e., Nufarm and BJs Restaurants go up and down completely randomly.
Pair Corralation between Nufarm and BJs Restaurants
Assuming the 90 days horizon Nufarm Limited is expected to generate 1.06 times more return on investment than BJs Restaurants. However, Nufarm is 1.06 times more volatile than BJs Restaurants. It trades about 0.07 of its potential returns per unit of risk. BJs Restaurants is currently generating about -0.07 per unit of risk. If you would invest 208.00 in Nufarm Limited on November 5, 2024 and sell it today you would earn a total of 4.00 from holding Nufarm Limited or generate 1.92% 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. BJs Restaurants
Performance |
| Timeline |
| Nufarm Limited |
| BJs Restaurants |
Nufarm and BJs Restaurants Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nufarm and BJs Restaurants
The main advantage of trading using opposite Nufarm and BJs Restaurants positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm position performs unexpectedly, BJs Restaurants 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 BJs Restaurants will offset losses from the drop in BJs Restaurants' long position.| Nufarm vs. PEPTONIC MEDICAL | Nufarm vs. MeVis Medical Solutions | Nufarm vs. ADRIATIC METALS LS 013355 | Nufarm vs. Nippon Light Metal |
| BJs Restaurants vs. SIVERS SEMICONDUCTORS AB | BJs Restaurants vs. NorAm Drilling AS | BJs Restaurants vs. Volkswagen AG | BJs Restaurants vs. Darden Restaurants |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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