Correlation Between Canadian Pacific and Nutrien
Can any of the company-specific risk be diversified away by investing in both Canadian Pacific and Nutrien 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 Canadian Pacific and Nutrien into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Canadian Pacific Railway and Nutrien, you can compare the effects of market volatilities on Canadian Pacific and Nutrien 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 Canadian Pacific with a short position of Nutrien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Canadian Pacific and Nutrien.
Diversification Opportunities for Canadian Pacific and Nutrien
-0.43 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Canadian and Nutrien is -0.43. Overlapping area represents the amount of risk that can be diversified away by holding Canadian Pacific Railway and Nutrien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutrien and Canadian Pacific 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 Canadian Pacific Railway are associated (or correlated) with Nutrien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutrien has no effect on the direction of Canadian Pacific i.e., Canadian Pacific and Nutrien go up and down completely randomly.
Pair Corralation between Canadian Pacific and Nutrien
Assuming the 90 days horizon Canadian Pacific Railway is expected to generate 0.62 times more return on investment than Nutrien. However, Canadian Pacific Railway is 1.61 times less risky than Nutrien. It trades about 0.01 of its potential returns per unit of risk. Nutrien is currently generating about -0.03 per unit of risk. If you would invest 10,718 in Canadian Pacific Railway on August 26, 2024 and sell it today you would earn a total of 3.00 from holding Canadian Pacific Railway or generate 0.03% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Canadian Pacific Railway vs. Nutrien
Performance |
| Timeline |
| Canadian Pacific Railway |
| Nutrien |
Canadian Pacific and Nutrien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Canadian Pacific and Nutrien
The main advantage of trading using opposite Canadian Pacific and Nutrien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Canadian Pacific position performs unexpectedly, Nutrien 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 Nutrien will offset losses from the drop in Nutrien's long position.| Canadian Pacific vs. Canadian National Railway | Canadian Pacific vs. TC Energy Corp | Canadian Pacific vs. Fortis Inc | Canadian Pacific vs. Loblaw Companies Limited |
| Nutrien vs. Brookfield Investments | Nutrien vs. Maple Leaf Foods | Nutrien vs. Maple Peak Investments | Nutrien vs. Bip Investment Corp |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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