Correlation Between Desjardins Alt and NBI Canadian
Can any of the company-specific risk be diversified away by investing in both Desjardins Alt and NBI Canadian 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 Canadian 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 Canadian Family, you can compare the effects of market volatilities on Desjardins Alt and NBI Canadian 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 Canadian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Desjardins Alt and NBI Canadian.
Diversification Opportunities for Desjardins Alt and NBI Canadian
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Desjardins and NBI is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Desjardins Alt LongShort and NBI Canadian Family in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Canadian Family 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 Canadian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Canadian Family has no effect on the direction of Desjardins Alt i.e., Desjardins Alt and NBI Canadian go up and down completely randomly.
Pair Corralation between Desjardins Alt and NBI Canadian
Assuming the 90 days trading horizon Desjardins Alt is expected to generate 1.51 times less return on investment than NBI Canadian. But when comparing it to its historical volatility, Desjardins Alt LongShort is 4.38 times less risky than NBI Canadian. It trades about 0.4 of its potential returns per unit of risk. NBI Canadian Family is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest 3,269 in NBI Canadian Family on August 29, 2024 and sell it today you would earn a total of 61.00 from holding NBI Canadian Family or generate 1.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.65% |
| Values | Daily Returns |
Desjardins Alt LongShort vs. NBI Canadian Family
Performance |
| Timeline |
| Desjardins Alt LongShort |
| NBI Canadian Family |
Desjardins Alt and NBI Canadian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Desjardins Alt and NBI Canadian
The main advantage of trading using opposite Desjardins Alt and NBI Canadian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Desjardins Alt position performs unexpectedly, NBI Canadian 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 Canadian will offset losses from the drop in NBI Canadian'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 Canadian vs. iShares SPTSX 60 | NBI Canadian vs. iShares Core SPTSX | NBI Canadian vs. BMO SPTSX Capped | NBI Canadian vs. Vanguard FTSE Canada |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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