Correlation Between Metro and Nutrien
Can any of the company-specific risk be diversified away by investing in both Metro 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 Metro and Nutrien into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Metro Inc and Nutrien, you can compare the effects of market volatilities on Metro 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 Metro with a short position of Nutrien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Metro and Nutrien.
Diversification Opportunities for Metro and Nutrien
Very good diversification
The 3 months correlation between Metro and Nutrien is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Metro Inc and Nutrien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutrien and Metro 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 Metro Inc 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 Metro i.e., Metro and Nutrien go up and down completely randomly.
Pair Corralation between Metro and Nutrien
Assuming the 90 days trading horizon Metro Inc is expected to generate 0.54 times more return on investment than Nutrien. However, Metro Inc is 1.85 times less risky than Nutrien. It trades about 0.05 of its potential returns per unit of risk. Nutrien is currently generating about -0.04 per unit of risk. If you would invest 7,572 in Metro Inc on August 30, 2024 and sell it today you would earn a total of 1,651 from holding Metro Inc or generate 21.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Metro Inc vs. Nutrien
Performance |
| Timeline |
| Metro Inc |
| Nutrien |
Metro and Nutrien Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Metro and Nutrien
The main advantage of trading using opposite Metro and Nutrien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metro 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.| Metro vs. Loblaw Companies Limited | Metro vs. Saputo Inc | Metro vs. Empire Company Limited | Metro vs. Dollarama |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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