Correlation Between Nutrien and HudBay Minerals
Can any of the company-specific risk be diversified away by investing in both Nutrien and HudBay Minerals 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 HudBay Minerals into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nutrien and HudBay Minerals, you can compare the effects of market volatilities on Nutrien and HudBay Minerals 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 HudBay Minerals. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nutrien and HudBay Minerals.
Diversification Opportunities for Nutrien and HudBay Minerals
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Nutrien and HudBay is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Nutrien and HudBay Minerals in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on HudBay Minerals 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 HudBay Minerals. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of HudBay Minerals has no effect on the direction of Nutrien i.e., Nutrien and HudBay Minerals go up and down completely randomly.
Pair Corralation between Nutrien and HudBay Minerals
Assuming the 90 days trading horizon Nutrien is expected to generate 32.36 times less return on investment than HudBay Minerals. But when comparing it to its historical volatility, Nutrien is 2.19 times less risky than HudBay Minerals. It trades about 0.01 of its potential returns per unit of risk. HudBay Minerals is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,055 in HudBay Minerals on August 29, 2024 and sell it today you would earn a total of 169.00 from holding HudBay Minerals or generate 16.02% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nutrien vs. HudBay Minerals
Performance |
| Timeline |
| Nutrien |
| HudBay Minerals |
Nutrien and HudBay Minerals Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nutrien and HudBay Minerals
The main advantage of trading using opposite Nutrien and HudBay Minerals positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nutrien position performs unexpectedly, HudBay Minerals 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 HudBay Minerals will offset losses from the drop in HudBay Minerals' long position.| Nutrien vs. NeXGold Mining Corp | Nutrien vs. CVS HEALTH CDR | Nutrien vs. Leveljump Healthcare Corp | Nutrien vs. DRI Healthcare Trust |
| HudBay Minerals vs. Lundin Mining | HudBay Minerals vs. First Quantum Minerals | HudBay Minerals vs. Ivanhoe Mines | HudBay Minerals vs. Capstone Mining Corp |
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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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