Correlation Between BOEING CDR and Nutrien

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

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

Diversification Opportunities for BOEING CDR and Nutrien

-0.07

Correlation Coefficient

BOEING CDR  Nutrien

Good diversification

The 3 months correlation between BOEING and Nutrien is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding BOEING CDR and Nutrien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutrien and BOEING CDR 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 BOEING CDR 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 BOEING CDR i.e., BOEING CDR and Nutrien go up and down completely randomly.

Pair Corralation between BOEING CDR and Nutrien

Assuming the 90 days trading horizon BOEING CDR is expected to under-perform the Nutrien. In addition to that, BOEING CDR is 1.14 times more volatile than Nutrien. It trades about -0.01 of its total potential returns per unit of risk. Nutrien is currently generating about 0.12 per unit of volatility. If you would invest  6,291  in Nutrien on December 30, 2024 and sell it today you would earn a total of  883.00  from holding Nutrien 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

BOEING CDR  vs.  Nutrien

BOEING CDR

Risk-Adjusted Performance

Very Weak

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

Nutrien

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nutrien are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating basic indicators, Nutrien displayed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with BOEING CDR and Nutrien

The main advantage of trading using opposite BOEING CDR and Nutrien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BOEING CDR 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 BOEING CDR 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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.