Correlation Between Iron Road and Nufarm Finance

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

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

Diversification Opportunities for Iron Road and Nufarm Finance

-0.66

Correlation Coefficient

Iron Road  Nufarm Finance

Excellent diversification

The 3 months correlation between Iron and Nufarm is -0.66. Overlapping area represents the amount of risk that can be diversified away by holding Iron Road 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 Iron Road 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 Iron Road 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 Iron Road i.e., Iron Road and Nufarm Finance go up and down completely randomly.

Pair Corralation between Iron Road and Nufarm Finance

Assuming the 90 days trading horizon Iron Road is expected to under-perform the Nufarm Finance. In addition to that, Iron Road is 4.83 times more volatile than Nufarm Finance NZ. It trades about -0.03 of its total potential returns per unit of risk. Nufarm Finance NZ is currently generating about 0.05 per unit of volatility. If you would invest  7,989  in Nufarm Finance NZ on October 26, 2024 and sell it today you would earn a total of  1,355  from holding Nufarm Finance NZ or generate 16.96% return on investment over 90 days.

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

Iron Road  vs.  Nufarm Finance NZ

Iron Road

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Iron Road has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of uncertain performance in the last few months, the Stock's fundamental indicators remain comparatively stable which may send shares a bit higher in February 2025. The newest uproar may also be a sign of mid-term up-swing for the firm private investors.

Nufarm Finance NZ

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Nufarm Finance NZ are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Nufarm Finance is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with Iron Road and Nufarm Finance

The main advantage of trading using opposite Iron Road and Nufarm Finance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Iron Road 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.

The idea behind Iron Road and Nufarm Finance NZ 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.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.