Correlation Between NBI Liquid and NBI Active
Can any of the company-specific risk be diversified away by investing in both NBI Liquid and NBI Active 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 NBI Liquid and NBI Active into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NBI Liquid Alternatives and NBI Active Canadian, you can compare the effects of market volatilities on NBI Liquid and NBI Active 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 NBI Liquid with a short position of NBI Active. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBI Liquid and NBI Active.
Diversification Opportunities for NBI Liquid and NBI Active
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NBI and NBI is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding NBI Liquid Alternatives and NBI Active Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Active Canadian and NBI Liquid 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 NBI Liquid Alternatives are associated (or correlated) with NBI Active. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Active Canadian has no effect on the direction of NBI Liquid i.e., NBI Liquid and NBI Active go up and down completely randomly.
Pair Corralation between NBI Liquid and NBI Active
Assuming the 90 days trading horizon NBI Liquid Alternatives is expected to generate 2.81 times more return on investment than NBI Active. However, NBI Liquid is 2.81 times more volatile than NBI Active Canadian. It trades about 0.09 of its potential returns per unit of risk. NBI Active Canadian is currently generating about 0.03 per unit of risk. If you would invest 2,210 in NBI Liquid Alternatives on December 1, 2024 and sell it today you would earn a total of 25.00 from holding NBI Liquid Alternatives or generate 1.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NBI Liquid Alternatives vs. NBI Active Canadian
Performance |
| Timeline |
| NBI Liquid Alternatives |
| NBI Active Canadian |
NBI Liquid and NBI Active Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NBI Liquid and NBI Active
The main advantage of trading using opposite NBI Liquid and NBI Active positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBI Liquid position performs unexpectedly, NBI Active 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 Active will offset losses from the drop in NBI Active's long position.| NBI Liquid vs. AGFiQ Market Neutral | NBI Liquid vs. Picton Mahoney Fortified | NBI Liquid vs. Purpose Diversified Real | NBI Liquid vs. Desjardins Alt LongShort |
| NBI Active vs. BMO Preferred Share | NBI Active vs. BMO Put Write | NBI Active vs. BMO High Yield | NBI Active vs. BMO Put Write |
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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.
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