Correlation Between Scotts Miracle and Nutrien
Can any of the company-specific risk be diversified away by investing in both Scotts Miracle and Nutrien 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 Scotts Miracle and Nutrien into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Scotts Miracle Gro and Nutrien, you can compare the effects of market volatilities on Scotts Miracle and Nutrien 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 Scotts Miracle with a short position of Nutrien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Scotts Miracle and Nutrien.
Diversification Opportunities for Scotts Miracle and Nutrien
-0.17 | Correlation Coefficient |
Good diversification
The 3 months correlation between Scotts and Nutrien is -0.17. Overlapping area represents the amount of risk that can be diversified away by holding Scotts Miracle Gro and Nutrien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutrien and Scotts Miracle 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 Scotts Miracle Gro are associated (or correlated) with Nutrien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nutrien has no effect on the direction of Scotts Miracle i.e., Scotts Miracle and Nutrien go up and down completely randomly.
Pair Corralation between Scotts Miracle and Nutrien
Considering the 90-day investment horizon Scotts Miracle Gro is expected to under-perform the Nutrien. In addition to that, Scotts Miracle is 1.07 times more volatile than Nutrien. It trades about -0.21 of its total potential returns per unit of risk. Nutrien is currently generating about 0.15 per unit of volatility. If you would invest 4,534 in Nutrien on November 26, 2024 and sell it today you would earn a total of 725.00 from holding Nutrien or generate 15.99% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Insignificant |
Accuracy | 100.0% |
Values | Daily Returns |
Scotts Miracle Gro vs. Nutrien
Performance |
Timeline |
Scotts Miracle Gro |
Nutrien |
Scotts Miracle and Nutrien Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Scotts Miracle and Nutrien
The main advantage of trading using opposite Scotts Miracle and Nutrien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Scotts Miracle position performs unexpectedly, Nutrien 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 Nutrien will offset losses from the drop in Nutrien's long position.Scotts Miracle vs. Corteva | ||
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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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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