Correlation Between Xstate Resources and Nufarm Finance
Can any of the company-specific risk be diversified away by investing in both Xstate Resources and Nufarm Finance 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 Xstate Resources and Nufarm Finance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xstate Resources and Nufarm Finance NZ, you can compare the effects of market volatilities on Xstate Resources and Nufarm Finance 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 Xstate Resources with a short position of Nufarm Finance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xstate Resources and Nufarm Finance.
Diversification Opportunities for Xstate Resources and Nufarm Finance
0.0 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Xstate and Nufarm is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Xstate Resources and Nufarm Finance NZ in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Finance NZ and Xstate Resources 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 Xstate Resources are associated (or correlated) with Nufarm Finance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm Finance NZ has no effect on the direction of Xstate Resources i.e., Xstate Resources and Nufarm Finance go up and down completely randomly.
Pair Corralation between Xstate Resources and Nufarm Finance
Assuming the 90 days trading horizon Xstate Resources is expected to generate 9.53 times more return on investment than Nufarm Finance. However, Xstate Resources is 9.53 times more volatile than Nufarm Finance NZ. It trades about 0.02 of its potential returns per unit of risk. Nufarm Finance NZ is currently generating about 0.06 per unit of risk. If you would invest 1.30 in Xstate Resources on August 31, 2024 and sell it today you would lose (0.40) from holding Xstate Resources or give up 30.77% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Flat |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xstate Resources vs. Nufarm Finance NZ
Performance |
| Timeline |
| Xstate Resources |
| Nufarm Finance NZ |
Xstate Resources and Nufarm Finance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xstate Resources and Nufarm Finance
The main advantage of trading using opposite Xstate Resources and Nufarm Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xstate Resources position performs unexpectedly, Nufarm Finance 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 Nufarm Finance will offset losses from the drop in Nufarm Finance's long position.| Xstate Resources vs. Nufarm Finance NZ | Xstate Resources vs. Seven West Media | Xstate Resources vs. Autosports Group | Xstate Resources vs. BTC Health Limited |
| Nufarm Finance vs. Ecofibre | Nufarm Finance vs. iShares Global Healthcare | Nufarm Finance vs. Ridley | Nufarm Finance vs. Australian Dairy Farms |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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