Correlation Between A W and Nutrien

Can any of the company-specific risk be diversified away by investing in both A W 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 A W and Nutrien into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between A W FOOD and Nutrien, you can compare the effects of market volatilities on A W 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 A W with a short position of Nutrien. Check out your portfolio center. Please also check ongoing floating volatility patterns of A W and Nutrien.

Diversification Opportunities for A W and Nutrien

-0.03

Correlation Coefficient

A W  Nutrien

Good diversification

The 3 months correlation between A W and Nutrien is -0.03. Overlapping area represents the amount of risk that can be diversified away by holding A W FOOD and Nutrien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutrien and A W 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 A W FOOD 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 A W i.e., A W and Nutrien go up and down completely randomly.

Pair Corralation between A W and Nutrien

Assuming the 90 days horizon A W FOOD is expected to under-perform the Nutrien. But the stock apears to be less risky and, when comparing its historical volatility, A W FOOD is 1.02 times less risky than Nutrien. The stock trades about -0.16 of its potential returns per unit of risk. The Nutrien is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6,682  in Nutrien on October 10, 2024 and sell it today you would earn a total of  248.00  from holding Nutrien or generate 3.71% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	91.67%
Values	Daily Returns

A W FOOD  vs.  Nutrien

A W FOOD

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days A W FOOD has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of abnormal performance in the last few months, the Stock's basic indicators remain very healthy which may send shares a bit higher in February 2025. The recent disarray may also be a sign of long period up-swing for the firm investors.

Nutrien

Risk-Adjusted Performance

0 of 100

Insignificant

Over the last 90 days Nutrien has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Nutrien is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with A W and Nutrien

The main advantage of trading using opposite A W and Nutrien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if A W 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.

The idea behind A W FOOD and Nutrien pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Money Managers module to screen money managers from public funds and ETFs managed around the world.