Correlation Between Nutrien and Metro
Can any of the company-specific risk be diversified away by investing in both Nutrien and Metro 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 Metro into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nutrien and Metro Inc, you can compare the effects of market volatilities on Nutrien and Metro 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 Metro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nutrien and Metro.
Diversification Opportunities for Nutrien and Metro
Very good diversification
The 3 months correlation between Nutrien and Metro is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Nutrien and Metro Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Metro Inc 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 Metro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Metro Inc has no effect on the direction of Nutrien i.e., Nutrien and Metro go up and down completely randomly.
Pair Corralation between Nutrien and Metro
Assuming the 90 days trading horizon Nutrien is expected to under-perform the Metro. In addition to that, Nutrien is 1.85 times more volatile than Metro Inc. It trades about -0.04 of its total potential returns per unit of risk. Metro Inc is currently generating about 0.05 per unit of volatility. 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 |
Nutrien vs. Metro Inc
Performance |
| Timeline |
| Nutrien |
| Metro Inc |
Nutrien and Metro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nutrien and Metro
The main advantage of trading using opposite Nutrien and Metro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nutrien position performs unexpectedly, Metro 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 Metro will offset losses from the drop in Metro's long position.| Nutrien vs. NeXGold Mining Corp | Nutrien vs. CVS HEALTH CDR | Nutrien vs. Leveljump Healthcare Corp | Nutrien vs. DRI Healthcare Trust |
| Metro vs. Loblaw Companies Limited | Metro vs. Saputo Inc | Metro vs. Empire Company Limited | Metro vs. Dollarama |
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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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