Correlation Between Corteva and Nufarm

Can any of the company-specific risk be diversified away by investing in both Corteva and Nufarm 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 Corteva and Nufarm into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Corteva and Nufarm Limited, you can compare the effects of market volatilities on Corteva and Nufarm 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 Corteva with a short position of Nufarm. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corteva and Nufarm.

Diversification Opportunities for Corteva and Nufarm

0.29

Correlation Coefficient

Corteva  Nufarm

Modest diversification

The 3 months correlation between Corteva and Nufarm is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding Corteva and Nufarm Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nufarm Limited and Corteva 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 Corteva are associated (or correlated) with Nufarm. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nufarm Limited has no effect on the direction of Corteva i.e., Corteva and Nufarm go up and down completely randomly.

Pair Corralation between Corteva and Nufarm

Assuming the 90 days trading horizon Corteva is expected to generate 1.33 times less return on investment than Nufarm. But when comparing it to its historical volatility, Corteva is 1.16 times less risky than Nufarm. It trades about 0.08 of its potential returns per unit of risk. Nufarm Limited is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  208.00  in Nufarm Limited on December 30, 2024 and sell it today you would earn a total of  20.00  from holding Nufarm Limited or generate 9.62% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Corteva  vs.  Nufarm Limited

Corteva

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Corteva are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively fragile basic indicators, Corteva may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Nufarm Limited

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nufarm Limited are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nufarm may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Corteva and Nufarm

The main advantage of trading using opposite Corteva and Nufarm positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corteva position performs unexpectedly, Nufarm 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 will offset losses from the drop in Nufarm's long position.

The idea behind Corteva and Nufarm Limited 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.

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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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.