Correlation Between Corteva and Nutrien
Can any of the company-specific risk be diversified away by investing in both Corteva 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 Corteva and Nutrien into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Corteva and Nutrien, you can compare the effects of market volatilities on Corteva 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 Corteva with a short position of Nutrien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Corteva and Nutrien.
Diversification Opportunities for Corteva and Nutrien
Very weak diversification
The 3 months correlation between Corteva and Nutrien is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Corteva and Nutrien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutrien and Corteva 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 Corteva 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 Corteva i.e., Corteva and Nutrien go up and down completely randomly.
Pair Corralation between Corteva and Nutrien
Given the investment horizon of 90 days Corteva is expected to generate 0.99 times more return on investment than Nutrien. However, Corteva is 1.01 times less risky than Nutrien. It trades about 0.06 of its potential returns per unit of risk. Nutrien is currently generating about -0.1 per unit of risk. If you would invest 5,533 in Corteva on August 24, 2024 and sell it today you would earn a total of 543.00 from holding Corteva or generate 9.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Corteva vs. Nutrien
Performance |
| Timeline |
| Corteva |
| Nutrien |
Corteva and Nutrien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Corteva and Nutrien
The main advantage of trading using opposite Corteva and Nutrien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Corteva 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.| Corteva vs. CF Industries Holdings | Corteva vs. American Vanguard | Corteva vs. Intrepid Potash | Corteva vs. The Mosaic |
| Nutrien vs. CF Industries Holdings | Nutrien vs. Intrepid Potash | Nutrien vs. Corteva | Nutrien vs. ICL Israel Chemicals |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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