Correlation Between Nutrien and Corteva
Can any of the company-specific risk be diversified away by investing in both Nutrien and Corteva 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 Corteva into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nutrien and Corteva, you can compare the effects of market volatilities on Nutrien and Corteva 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 Corteva. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nutrien and Corteva.
Diversification Opportunities for Nutrien and Corteva
Very weak diversification
The 3 months correlation between Nutrien and Corteva is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Nutrien and Corteva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corteva 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 Corteva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corteva has no effect on the direction of Nutrien i.e., Nutrien and Corteva go up and down completely randomly.
Pair Corralation between Nutrien and Corteva
Considering the 90-day investment horizon Nutrien is expected to under-perform the Corteva. But the stock apears to be less risky and, when comparing its historical volatility, Nutrien is 1.14 times less risky than Corteva. The stock trades about -0.07 of its potential returns per unit of risk. The Corteva is currently generating about 0.01 of returns per unit of risk over similar time horizon. If you would invest 6,113 in Corteva on August 27, 2024 and sell it today you would earn a total of 10.00 from holding Corteva or generate 0.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nutrien vs. Corteva
Performance |
| Timeline |
| Nutrien |
| Corteva |
Nutrien and Corteva Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nutrien and Corteva
The main advantage of trading using opposite Nutrien and Corteva positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nutrien position performs unexpectedly, Corteva 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 Corteva will offset losses from the drop in Corteva's long position.| Nutrien vs. CF Industries Holdings | Nutrien vs. Intrepid Potash | Nutrien vs. Corteva | Nutrien vs. ICL Israel Chemicals |
| Corteva vs. CF Industries Holdings | Corteva vs. American Vanguard | Corteva vs. Intrepid Potash | Corteva vs. The Mosaic |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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