Correlation Between IShares Core and NBI Sustainable
Can any of the company-specific risk be diversified away by investing in both IShares Core 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 IShares Core and NBI Sustainable into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between iShares Core Canadian and NBI Sustainable Canadian, you can compare the effects of market volatilities on IShares Core 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 IShares Core with a short position of NBI Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and NBI Sustainable.
Diversification Opportunities for IShares Core and NBI Sustainable
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between IShares and NBI is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core Canadian 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 IShares Core 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 iShares Core Canadian 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 IShares Core i.e., IShares Core and NBI Sustainable go up and down completely randomly.
Pair Corralation between IShares Core and NBI Sustainable
Assuming the 90 days trading horizon iShares Core Canadian is expected to generate 0.96 times more return on investment than NBI Sustainable. However, iShares Core Canadian is 1.04 times less risky than NBI Sustainable. It trades about 0.06 of its potential returns per unit of risk. NBI Sustainable Canadian is currently generating about 0.05 per unit of risk. If you would invest 1,800 in iShares Core Canadian on August 27, 2024 and sell it today you would earn a total of 185.00 from holding iShares Core Canadian or generate 10.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
iShares Core Canadian vs. NBI Sustainable Canadian
Performance |
| Timeline |
| iShares Core Canadian |
| NBI Sustainable Canadian |
IShares Core and NBI Sustainable Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with IShares Core and NBI Sustainable
The main advantage of trading using opposite IShares Core and NBI Sustainable positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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.| IShares Core vs. Franklin Global Aggregate | IShares Core vs. Franklin Large Cap | IShares Core vs. First Trust Senior | IShares Core vs. BMO Aggregate Bond |
| NBI Sustainable vs. Franklin Global Aggregate | NBI Sustainable vs. Franklin Large Cap | NBI Sustainable vs. First Trust Senior | NBI Sustainable 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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