Correlation Between Nutrien and Mosaic

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

By analyzing existing cross correlation between Nutrien and The Mosaic, you can compare the effects of market volatilities on Nutrien and Mosaic 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 Mosaic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nutrien and Mosaic.

Diversification Opportunities for Nutrien and Mosaic

0.74

Correlation Coefficient

Nutrien  Mosaic

Poor diversification

The 3 months correlation between Nutrien and Mosaic is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Nutrien and The Mosaic in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mosaic 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 Mosaic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mosaic has no effect on the direction of Nutrien i.e., Nutrien and Mosaic go up and down completely randomly.

Pair Corralation between Nutrien and Mosaic

Assuming the 90 days horizon Nutrien is expected to generate 1.02 times less return on investment than Mosaic. But when comparing it to its historical volatility, Nutrien is 1.18 times less risky than Mosaic. It trades about 0.1 of its potential returns per unit of risk. The Mosaic is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest  2,242  in The Mosaic on December 29, 2024 and sell it today you would earn a total of  282.00  from holding The Mosaic or generate 12.58% return on investment over 90 days.

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

Nutrien  vs.  The Mosaic

Nutrien

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Nutrien are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Nutrien reported solid returns over the last few months and may actually be approaching a breakup point.

Mosaic

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in The Mosaic are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Mosaic reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Nutrien and Mosaic

The main advantage of trading using opposite Nutrien and Mosaic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nutrien position performs unexpectedly, Mosaic 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 Mosaic will offset losses from the drop in Mosaic's long position.

The idea behind Nutrien and The Mosaic 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 Top Crypto Exchanges module to search and analyze digital assets across top global cryptocurrency exchanges.