Correlation Between NBI Global and NBI Sustainable
Can any of the company-specific risk be diversified away by investing in both NBI Global 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 Global 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 Global Real and NBI Sustainable Canadian, you can compare the effects of market volatilities on NBI Global 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 Global with a short position of NBI Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBI Global and NBI Sustainable.
Diversification Opportunities for NBI Global and NBI Sustainable
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NBI and NBI is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding NBI Global Real 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 Global 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 Global Real 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 Global i.e., NBI Global and NBI Sustainable go up and down completely randomly.
Pair Corralation between NBI Global and NBI Sustainable
Assuming the 90 days trading horizon NBI Global is expected to generate 1.06 times less return on investment than NBI Sustainable. In addition to that, NBI Global is 1.78 times more volatile than NBI Sustainable Canadian. It trades about 0.02 of its total potential returns per unit of risk. NBI Sustainable Canadian is currently generating about 0.04 per unit of volatility. If you would invest 4,393 in NBI Sustainable Canadian on October 25, 2024 and sell it today you would earn a total of 22.00 from holding NBI Sustainable Canadian or generate 0.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
NBI Global Real vs. NBI Sustainable Canadian
Performance |
| Timeline |
| NBI Global Real |
| NBI Sustainable Canadian |
NBI Global and NBI Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NBI Global and NBI Sustainable
The main advantage of trading using opposite NBI Global and NBI Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBI Global 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 Global vs. NBI Active Canadian | NBI Global vs. NBI Liquid Alternatives | NBI Global vs. NBI Sustainable Canadian |
| 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 Economic Indicators module to top statistical indicators that provide insights into how an economy is performing.
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