Correlation Between NBI Liquid and NBI Sustainable
Can any of the company-specific risk be diversified away by investing in both NBI Liquid and NBI Sustainable 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 Sustainable 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 Sustainable Canadian, you can compare the effects of market volatilities on NBI Liquid and NBI Sustainable 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 Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBI Liquid and NBI Sustainable.
Diversification Opportunities for NBI Liquid and NBI Sustainable
-0.78 | Correlation Coefficient |
Pay attention - limited upside
The 3 months correlation between NBI and NBI is -0.78. Overlapping area represents the amount of risk that can be diversified away by holding NBI Liquid Alternatives and NBI Sustainable Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Sustainable 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 Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Sustainable Canadian has no effect on the direction of NBI Liquid i.e., NBI Liquid and NBI Sustainable go up and down completely randomly.
Pair Corralation between NBI Liquid and NBI Sustainable
Assuming the 90 days trading horizon NBI Liquid Alternatives is expected to under-perform the NBI Sustainable. But the etf apears to be less risky and, when comparing its historical volatility, NBI Liquid Alternatives is 1.14 times less risky than NBI Sustainable. The etf trades about -0.02 of its potential returns per unit of risk. The NBI Sustainable Canadian is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 3,534 in NBI Sustainable Canadian on September 3, 2024 and sell it today you would earn a total of 924.00 from holding NBI Sustainable Canadian or generate 26.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
NBI Liquid Alternatives vs. NBI Sustainable Canadian
Performance |
| Timeline |
| NBI Liquid Alternatives |
| NBI Sustainable Canadian |
NBI Liquid and NBI Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NBI Liquid and NBI Sustainable
The main advantage of trading using opposite NBI Liquid and NBI Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBI Liquid position performs unexpectedly, NBI Sustainable 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 Sustainable will offset losses from the drop in NBI Sustainable'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 Sustainable vs. NBI Sustainable Global | NBI Sustainable vs. NBI Active Canadian | NBI Sustainable vs. NBI Liquid Alternatives | NBI Sustainable vs. NBI Global Real |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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