Correlation Between YARA INTL and Corteva

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

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

Diversification Opportunities for YARA INTL and Corteva

0.0

Correlation Coefficient

YARA INTL  Corteva

Pay attention - limited upside

The 3 months correlation between YARA and Corteva is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding YARA INTL ASA and Corteva in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Corteva and YARA INTL 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 YARA INTL ASA are associated (or correlated) with Corteva. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Corteva has no effect on the direction of YARA INTL i.e., YARA INTL and Corteva go up and down completely randomly.

Pair Corralation between YARA INTL and Corteva

Assuming the 90 days trading horizon YARA INTL is expected to generate 1.19 times less return on investment than Corteva. But when comparing it to its historical volatility, YARA INTL ASA is 1.72 times less risky than Corteva. It trades about 0.11 of its potential returns per unit of risk. Corteva is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  4,833  in Corteva on September 12, 2024 and sell it today you would earn a total of  617.00  from holding Corteva or generate 12.77% return on investment over 90 days.

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

YARA INTL ASA  vs.  Corteva

YARA INTL ASA

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in YARA INTL ASA are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, YARA INTL may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Corteva

Risk-Adjusted Performance

6 of 100

Modest

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

Pair Trading with YARA INTL and Corteva

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

The idea behind YARA INTL ASA and Corteva 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.