Correlation Between Desjardins Alt and NBI Liquid
Can any of the company-specific risk be diversified away by investing in both Desjardins Alt and NBI Liquid 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 Desjardins Alt and NBI Liquid into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Desjardins Alt LongShort and NBI Liquid Alternatives, you can compare the effects of market volatilities on Desjardins Alt and NBI Liquid 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 Desjardins Alt with a short position of NBI Liquid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desjardins Alt and NBI Liquid.
Diversification Opportunities for Desjardins Alt and NBI Liquid
-0.95 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between Desjardins and NBI is -0.95. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins Alt LongShort and NBI Liquid Alternatives in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Liquid Alternatives and Desjardins Alt 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 Desjardins Alt LongShort are associated (or correlated) with NBI Liquid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Liquid Alternatives has no effect on the direction of Desjardins Alt i.e., Desjardins Alt and NBI Liquid go up and down completely randomly.
Pair Corralation between Desjardins Alt and NBI Liquid
Assuming the 90 days trading horizon Desjardins Alt LongShort is expected to generate 0.21 times more return on investment than NBI Liquid. However, Desjardins Alt LongShort is 4.86 times less risky than NBI Liquid. It trades about 0.27 of its potential returns per unit of risk. NBI Liquid Alternatives is currently generating about -0.21 per unit of risk. If you would invest 2,247 in Desjardins Alt LongShort on September 1, 2024 and sell it today you would earn a total of 19.00 from holding Desjardins Alt LongShort or generate 0.85% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Desjardins Alt LongShort vs. NBI Liquid Alternatives
Performance |
| Timeline |
| Desjardins Alt LongShort |
| NBI Liquid Alternatives |
Desjardins Alt and NBI Liquid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desjardins Alt and NBI Liquid
The main advantage of trading using opposite Desjardins Alt and NBI Liquid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desjardins Alt position performs unexpectedly, NBI Liquid 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 Liquid will offset losses from the drop in NBI Liquid's long position.| Desjardins Alt vs. AGFiQ Market Neutral | Desjardins Alt vs. Desjardins RI Canada | Desjardins Alt vs. NBI Liquid Alternatives | Desjardins Alt vs. Desjardins RI USA |
| NBI Liquid vs. AGFiQ Market Neutral | NBI Liquid vs. Picton Mahoney Fortified | NBI Liquid vs. Purpose Diversified Real | NBI Liquid vs. Desjardins Alt LongShort |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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