Correlation Between NBI Sustainable and IShares Core
Can any of the company-specific risk be diversified away by investing in both NBI Sustainable and IShares Core 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 Sustainable and IShares Core into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NBI Sustainable Canadian and iShares Core Canadian, you can compare the effects of market volatilities on NBI Sustainable and IShares Core 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 Sustainable with a short position of IShares Core. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBI Sustainable and IShares Core.
Diversification Opportunities for NBI Sustainable and IShares Core
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between NBI and IShares is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding NBI Sustainable Canadian and iShares Core Canadian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Core Canadian and NBI Sustainable 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 Sustainable Canadian are associated (or correlated) with IShares Core. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Core Canadian has no effect on the direction of NBI Sustainable i.e., NBI Sustainable and IShares Core go up and down completely randomly.
Pair Corralation between NBI Sustainable and IShares Core
Assuming the 90 days trading horizon NBI Sustainable Canadian is expected to generate 1.17 times more return on investment than IShares Core. However, NBI Sustainable is 1.17 times more volatile than iShares Core Canadian. It trades about -0.01 of its potential returns per unit of risk. iShares Core Canadian is currently generating about -0.03 per unit of risk. If you would invest 2,221 in NBI Sustainable Canadian on August 27, 2024 and sell it today you would lose (1.00) from holding NBI Sustainable Canadian or give up 0.05% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
NBI Sustainable Canadian vs. iShares Core Canadian
Performance |
| Timeline |
| NBI Sustainable Canadian |
| iShares Core Canadian |
NBI Sustainable and IShares Core Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with NBI Sustainable and IShares Core
The main advantage of trading using opposite NBI Sustainable and IShares Core positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBI Sustainable position performs unexpectedly, IShares Core 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 IShares Core will offset losses from the drop in IShares Core's long position.| NBI Sustainable vs. Franklin Global Aggregate | NBI Sustainable vs. Franklin Large Cap | NBI Sustainable vs. First Trust Senior | NBI Sustainable vs. BMO Aggregate Bond |
| IShares Core vs. Franklin Global Aggregate | IShares Core vs. Franklin Large Cap | IShares Core vs. First Trust Senior | IShares Core vs. BMO Aggregate Bond |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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