Correlation Between Nutrien and Teck Resources
Can any of the company-specific risk be diversified away by investing in both Nutrien and Teck Resources 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 Teck Resources into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nutrien and Teck Resources Limited, you can compare the effects of market volatilities on Nutrien and Teck Resources 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 Teck Resources. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nutrien and Teck Resources.
Diversification Opportunities for Nutrien and Teck Resources
-0.24 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nutrien and Teck is -0.24. Overlapping area represents the amount of risk that can be diversified away by holding Nutrien and Teck Resources Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teck Resources 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 Teck Resources. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teck Resources has no effect on the direction of Nutrien i.e., Nutrien and Teck Resources go up and down completely randomly.
Pair Corralation between Nutrien and Teck Resources
Assuming the 90 days trading horizon Nutrien is expected to under-perform the Teck Resources. But the stock apears to be less risky and, when comparing its historical volatility, Nutrien is 1.32 times less risky than Teck Resources. The stock trades about -0.03 of its potential returns per unit of risk. The Teck Resources Limited is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 5,356 in Teck Resources Limited on November 19, 2024 and sell it today you would earn a total of 752.00 from holding Teck Resources Limited or generate 14.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nutrien vs. Teck Resources Limited
Performance |
| Timeline |
| Nutrien |
| Teck Resources |
Nutrien and Teck Resources Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nutrien and Teck Resources
The main advantage of trading using opposite Nutrien and Teck Resources positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nutrien position performs unexpectedly, Teck Resources 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 Teck Resources will offset losses from the drop in Teck Resources' long position.| Nutrien vs. Canlan Ice Sports | Nutrien vs. Kootenay Silver | Nutrien vs. Perseus Mining | Nutrien vs. Metalero Mining Corp |
| Teck Resources vs. First Quantum Minerals | Teck Resources vs. Nutrien | Teck Resources vs. Lundin Mining | Teck Resources vs. Wheaton Precious Metals |
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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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