Correlation Between Nutrien and Alimentation Couchen
Can any of the company-specific risk be diversified away by investing in both Nutrien and Alimentation Couchen 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 Nutrien and Alimentation Couchen into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nutrien and Alimentation Couchen Tard, you can compare the effects of market volatilities on Nutrien and Alimentation Couchen 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 Nutrien with a short position of Alimentation Couchen. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nutrien and Alimentation Couchen.
Diversification Opportunities for Nutrien and Alimentation Couchen
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nutrien and Alimentation is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Nutrien and Alimentation Couchen Tard in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alimentation Couchen Tard and Nutrien 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 Nutrien are associated (or correlated) with Alimentation Couchen. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alimentation Couchen Tard has no effect on the direction of Nutrien i.e., Nutrien and Alimentation Couchen go up and down completely randomly.
Pair Corralation between Nutrien and Alimentation Couchen
Assuming the 90 days trading horizon Nutrien is expected to generate 1.13 times more return on investment than Alimentation Couchen. However, Nutrien is 1.13 times more volatile than Alimentation Couchen Tard. It trades about 0.14 of its potential returns per unit of risk. Alimentation Couchen Tard is currently generating about 0.03 per unit of risk. If you would invest 6,187 in Nutrien on November 2, 2024 and sell it today you would earn a total of 1,388 from holding Nutrien or generate 22.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nutrien vs. Alimentation Couchen Tard
Performance |
| Timeline |
| Nutrien |
| Alimentation Couchen Tard |
Nutrien and Alimentation Couchen Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nutrien and Alimentation Couchen
The main advantage of trading using opposite Nutrien and Alimentation Couchen positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nutrien position performs unexpectedly, Alimentation Couchen 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 Alimentation Couchen will offset losses from the drop in Alimentation Couchen's long position.| Nutrien vs. Income Financial Trust | Nutrien vs. Stampede Drilling | Nutrien vs. Olympia Financial Group | Nutrien vs. US Financial 15 |
| Alimentation Couchen vs. Metro Inc | Alimentation Couchen vs. Dollarama | Alimentation Couchen vs. Nutrien | Alimentation Couchen vs. Canadian Pacific Railway |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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