Correlation Between First Quantum and Nutrien
Can any of the company-specific risk be diversified away by investing in both First Quantum 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 First Quantum and Nutrien into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Quantum Minerals and Nutrien, you can compare the effects of market volatilities on First Quantum 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 First Quantum with a short position of Nutrien. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Quantum and Nutrien.
Diversification Opportunities for First Quantum and Nutrien
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between First and Nutrien is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding First Quantum Minerals and Nutrien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutrien and First Quantum 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 First Quantum Minerals 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 First Quantum i.e., First Quantum and Nutrien go up and down completely randomly.
Pair Corralation between First Quantum and Nutrien
Assuming the 90 days horizon First Quantum Minerals is expected to generate 1.98 times more return on investment than Nutrien. However, First Quantum is 1.98 times more volatile than Nutrien. It trades about 0.03 of its potential returns per unit of risk. Nutrien is currently generating about 0.0 per unit of risk. If you would invest 1,844 in First Quantum Minerals on August 29, 2024 and sell it today you would earn a total of 25.00 from holding First Quantum Minerals or generate 1.36% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
First Quantum Minerals vs. Nutrien
Performance |
| Timeline |
| First Quantum Minerals |
| Nutrien |
First Quantum and Nutrien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Quantum and Nutrien
The main advantage of trading using opposite First Quantum and Nutrien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Quantum 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.| First Quantum vs. Lundin Mining | First Quantum vs. HudBay Minerals | First Quantum vs. Teck Resources Limited | First Quantum vs. Ivanhoe Mines |
| Nutrien vs. NeXGold Mining Corp | Nutrien vs. CVS HEALTH CDR | Nutrien vs. Leveljump Healthcare Corp | Nutrien vs. DRI Healthcare Trust |
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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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