Correlation Between Navigator Global and Australian Agricultural

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

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

Diversification Opportunities for Navigator Global and Australian Agricultural

0.71

Correlation Coefficient

Navigator Global  Australian Agricultural

Poor diversification

The 3 months correlation between Navigator and Australian is 0.71. Overlapping area represents the amount of risk that can be diversified away by holding Navigator Global Investments and Australian Agricultural in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Australian Agricultural and Navigator Global 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 Navigator Global Investments are associated (or correlated) with Australian Agricultural. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Australian Agricultural has no effect on the direction of Navigator Global i.e., Navigator Global and Australian Agricultural go up and down completely randomly.

Pair Corralation between Navigator Global and Australian Agricultural

Assuming the 90 days trading horizon Navigator Global Investments is expected to generate 2.17 times more return on investment than Australian Agricultural. However, Navigator Global is 2.17 times more volatile than Australian Agricultural. It trades about 0.05 of its potential returns per unit of risk. Australian Agricultural is currently generating about 0.06 per unit of risk. If you would invest  170.00  in Navigator Global Investments on December 25, 2024 and sell it today you would earn a total of  11.00  from holding Navigator Global Investments or generate 6.47% return on investment over 90 days.

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

Navigator Global Investments  vs.  Australian Agricultural

Navigator Global Inv

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Navigator Global Investments are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain forward indicators, Navigator Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Australian Agricultural

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Australian Agricultural are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable fundamental indicators, Australian Agricultural 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 Navigator Global and Australian Agricultural

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

The idea behind Navigator Global Investments and Australian Agricultural 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.