Correlation Between Future Metals and Nutrien
Can any of the company-specific risk be diversified away by investing in both Future Metals 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 Future Metals and Nutrien into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Future Metals NL and Nutrien, you can compare the effects of market volatilities on Future Metals 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 Future Metals with a short position of Nutrien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Future Metals and Nutrien.
Diversification Opportunities for Future Metals and Nutrien
0.28 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Future and Nutrien is 0.28. Overlapping area represents the amount of risk that can be diversified away by holding Future Metals NL and Nutrien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutrien and Future Metals 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 Future Metals NL 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 Future Metals i.e., Future Metals and Nutrien go up and down completely randomly.
Pair Corralation between Future Metals and Nutrien
Assuming the 90 days trading horizon Future Metals NL is expected to under-perform the Nutrien. In addition to that, Future Metals is 2.64 times more volatile than Nutrien. It trades about -0.03 of its total potential returns per unit of risk. Nutrien is currently generating about -0.03 per unit of volatility. If you would invest 6,109 in Nutrien on September 12, 2024 and sell it today you would lose (1,245) from holding Nutrien or give up 20.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 98.87% |
| Values | Daily Returns |
Future Metals NL vs. Nutrien
Performance |
| Timeline |
| Future Metals NL |
| Nutrien |
Future Metals and Nutrien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Future Metals and Nutrien
The main advantage of trading using opposite Future Metals and Nutrien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Future Metals 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.| Future Metals vs. Givaudan SA | Future Metals vs. Antofagasta PLC | Future Metals vs. Ferrexpo PLC | Future Metals vs. Atalaya Mining |
| Nutrien vs. Hochschild Mining plc | Nutrien vs. Eastinco Mining Exploration | Nutrien vs. Central Asia Metals | Nutrien vs. Bisichi Mining PLC |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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