Correlation Between Nufarm and ENSTAR GROUP
Can any of the company-specific risk be diversified away by investing in both Nufarm and ENSTAR GROUP 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 ENSTAR GROUP into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nufarm Limited and ENSTAR GROUP LTD, you can compare the effects of market volatilities on Nufarm and ENSTAR GROUP 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 ENSTAR GROUP. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nufarm and ENSTAR GROUP.
Diversification Opportunities for Nufarm and ENSTAR GROUP
0.13 | Correlation Coefficient |
Average diversification
The 3 months correlation between Nufarm and ENSTAR is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Nufarm Limited and ENSTAR GROUP LTD in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ENSTAR GROUP LTD 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 ENSTAR GROUP. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ENSTAR GROUP LTD has no effect on the direction of Nufarm i.e., Nufarm and ENSTAR GROUP go up and down completely randomly.
Pair Corralation between Nufarm and ENSTAR GROUP
Assuming the 90 days horizon Nufarm Limited is expected to generate 2.31 times more return on investment than ENSTAR GROUP. However, Nufarm is 2.31 times more volatile than ENSTAR GROUP LTD. It trades about 0.08 of its potential returns per unit of risk. ENSTAR GROUP LTD is currently generating about 0.04 per unit of risk. If you would invest 208.00 in Nufarm Limited on December 28, 2024 and sell it today you would earn a total of 18.00 from holding Nufarm Limited or generate 8.65% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.41% |
Values | Daily Returns |
Nufarm Limited vs. ENSTAR GROUP LTD
Performance |
Timeline |
Nufarm Limited |
ENSTAR GROUP LTD |
Nufarm and ENSTAR GROUP Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Nufarm and ENSTAR GROUP
The main advantage of trading using opposite Nufarm and ENSTAR GROUP positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nufarm position performs unexpectedly, ENSTAR GROUP 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 ENSTAR GROUP will offset losses from the drop in ENSTAR GROUP's long position.Nufarm vs. Nutrien | Nufarm vs. CF Industries Holdings | Nufarm vs. Yara International ASA | Nufarm vs. The Scotts Miracle Gro |
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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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.
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