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

0.57

Correlation Coefficient

Nutrien  Mosaic

Very weak diversification

The 3 months correlation between Nutrien and Mosaic is 0.57. 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

Considering the 90-day investment horizon Nutrien is expected to generate 0.6 times more return on investment than Mosaic. However, Nutrien is 1.68 times less risky than Mosaic. It trades about 0.01 of its potential returns per unit of risk. The Mosaic is currently generating about -0.03 per unit of risk. If you would invest  4,592  in Nutrien on August 31, 2024 and sell it today you would earn a total of  17.00  from holding Nutrien or generate 0.37% return on investment over 90 days.

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

Nutrien  vs.  The Mosaic

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. Even with relatively invariable basic indicators, Nutrien is not utilizing all of its potentials. The current stock price agitation, may contribute to short-term losses for the retail investors.

Mosaic

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days The Mosaic has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Mosaic is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

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.

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 Portfolio Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.