Correlation Between Astar and NBI High
Can any of the company-specific risk be diversified away by investing in both Astar and NBI High 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 Astar and NBI High into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Astar and NBI High Yield, you can compare the effects of market volatilities on Astar and NBI High 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 Astar with a short position of NBI High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astar and NBI High.
Diversification Opportunities for Astar and NBI High
Good diversification
The 3 months correlation between Astar and NBI is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Astar and NBI High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI High Yield and Astar 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 Astar are associated (or correlated) with NBI High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI High Yield has no effect on the direction of Astar i.e., Astar and NBI High go up and down completely randomly.
Pair Corralation between Astar and NBI High
Assuming the 90 days trading horizon Astar is expected to generate 15.23 times more return on investment than NBI High. However, Astar is 15.23 times more volatile than NBI High Yield. It trades about 0.01 of its potential returns per unit of risk. NBI High Yield is currently generating about 0.09 per unit of risk. If you would invest 5.24 in Astar on November 2, 2024 and sell it today you would lose (0.27) from holding Astar or give up 5.15% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.31% |
| Values | Daily Returns |
Astar vs. NBI High Yield
Performance |
| Timeline |
| Astar |
| NBI High Yield |
Astar and NBI High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Astar and NBI High
The main advantage of trading using opposite Astar and NBI High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Astar position performs unexpectedly, NBI High 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 NBI High will offset losses from the drop in NBI High's long position.The idea behind Astar and NBI High Yield 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.| NBI High vs. NBI Unconstrained Fixed | NBI High vs. NBI Active Canadian | NBI High vs. NBI Sustainable Canadian | NBI High vs. Picton Mahoney Fortified |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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