Correlation Between NBI Active and NBI Global
Can any of the company-specific risk be diversified away by investing in both NBI Active and NBI Global 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 Active and NBI Global into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NBI Active Canadian and NBI Global Real, you can compare the effects of market volatilities on NBI Active and NBI Global 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 Active with a short position of NBI Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBI Active and NBI Global.
Diversification Opportunities for NBI Active and NBI Global
-0.2 | Correlation Coefficient |
Good diversification
The 3 months correlation between NBI and NBI is -0.2. Overlapping area represents the amount of risk that can be diversified away by holding NBI Active Canadian and NBI Global Real in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Global Real and NBI Active 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 Active Canadian are associated (or correlated) with NBI Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Global Real has no effect on the direction of NBI Active i.e., NBI Active and NBI Global go up and down completely randomly.
Pair Corralation between NBI Active and NBI Global
Assuming the 90 days trading horizon NBI Active is expected to generate 1.04 times less return on investment than NBI Global. But when comparing it to its historical volatility, NBI Active Canadian is 1.76 times less risky than NBI Global. It trades about 0.18 of its potential returns per unit of risk. NBI Global Real is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 2,108 in NBI Global Real on November 3, 2024 and sell it today you would earn a total of 210.00 from holding NBI Global Real or generate 9.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NBI Active Canadian vs. NBI Global Real
Performance |
| Timeline |
| NBI Active Canadian |
| NBI Global Real |
NBI Active and NBI Global Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NBI Active and NBI Global
The main advantage of trading using opposite NBI Active and NBI Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBI Active position performs unexpectedly, NBI Global 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 Global will offset losses from the drop in NBI Global's long position.| NBI Active vs. TD Active Preferred | NBI Active vs. RBC Canadian Preferred | NBI Active vs. Dynamic Active Preferred | NBI Active vs. NBI Global Real |
| NBI Global vs. NBI Active Canadian | NBI Global vs. NBI Liquid Alternatives | NBI Global vs. NBI Sustainable Canadian |
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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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