Correlation Between High Liner and Nutrien

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

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

Diversification Opportunities for High Liner and Nutrien

-0.1

Correlation Coefficient

High Liner  Nutrien

Good diversification

The 3 months correlation between High and Nutrien is -0.1. Overlapping area represents the amount of risk that can be diversified away by holding High Liner Foods and Nutrien in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nutrien and High Liner 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 High Liner Foods 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 High Liner i.e., High Liner and Nutrien go up and down completely randomly.

Pair Corralation between High Liner and Nutrien

Assuming the 90 days trading horizon High Liner Foods is expected to generate 0.97 times more return on investment than Nutrien. However, High Liner Foods is 1.04 times less risky than Nutrien. It trades about 0.04 of its potential returns per unit of risk. Nutrien is currently generating about -0.04 per unit of risk. If you would invest  1,264  in High Liner Foods on September 29, 2024 and sell it today you would earn a total of  328.00  from holding High Liner Foods or generate 25.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

High Liner Foods  vs.  Nutrien

High Liner Foods

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in High Liner Foods are ranked lower than 20 (%) of all global equities and portfolios over the last 90 days. In spite of very uncertain technical and fundamental indicators, High Liner displayed solid returns over the last few months and may actually be approaching a breakup point.

Nutrien

Risk-Adjusted Performance

0 of 100

Very Weak

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 latest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with High Liner and Nutrien

The main advantage of trading using opposite High Liner and Nutrien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if High Liner 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 High Liner Foods 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.