Correlation Between Nutrien and Golden Metal
Can any of the company-specific risk be diversified away by investing in both Nutrien and Golden Metal 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 Nutrien and Golden Metal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nutrien and Golden Metal Resources, you can compare the effects of market volatilities on Nutrien and Golden Metal 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 Nutrien with a short position of Golden Metal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nutrien and Golden Metal.
Diversification Opportunities for Nutrien and Golden Metal
-0.33 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nutrien and Golden is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nutrien and Golden Metal Resources in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Golden Metal Resources and Nutrien 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 Nutrien are associated (or correlated) with Golden Metal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Golden Metal Resources has no effect on the direction of Nutrien i.e., Nutrien and Golden Metal go up and down completely randomly.
Pair Corralation between Nutrien and Golden Metal
Assuming the 90 days trading horizon Nutrien is expected to generate 1.38 times less return on investment than Golden Metal. But when comparing it to its historical volatility, Nutrien is 2.83 times less risky than Golden Metal. It trades about 0.07 of its potential returns per unit of risk. Golden Metal Resources is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest 2,900 in Golden Metal Resources on September 12, 2024 and sell it today you would earn a total of 100.00 from holding Golden Metal Resources or generate 3.45% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 98.46% |
| Values | Daily Returns |
Nutrien vs. Golden Metal Resources
Performance |
| Timeline |
| Nutrien |
| Golden Metal Resources |
Nutrien and Golden Metal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nutrien and Golden Metal
The main advantage of trading using opposite Nutrien and Golden Metal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nutrien position performs unexpectedly, Golden Metal 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 Golden Metal will offset losses from the drop in Golden Metal's long position.| Nutrien vs. Hochschild Mining plc | Nutrien vs. Eastinco Mining Exploration | Nutrien vs. Central Asia Metals | Nutrien vs. Bisichi Mining PLC |
| Golden Metal vs. Spotify Technology SA | Golden Metal vs. Darden Restaurants | Golden Metal vs. GoldMining | Golden Metal vs. Vitec Software Group |
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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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