Correlation Between CI Yield and NBI High

Can any of the company-specific risk be diversified away by investing in both CI Yield and NBI High 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 CI Yield and NBI High into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between CI Yield Enhanced and NBI High Yield, you can compare the effects of market volatilities on CI Yield and NBI High 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 CI Yield with a short position of NBI High. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI Yield and NBI High.

Diversification Opportunities for CI Yield and NBI High

0.41

Correlation Coefficient

CI Yield  NBI High

Very weak diversification

The 3 months correlation between CAGG and NBI is 0.41. Overlapping area represents the amount of risk that can be diversified away by holding CI Yield Enhanced and NBI High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI High Yield and CI Yield 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 CI Yield Enhanced are associated (or correlated) with NBI High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI High Yield has no effect on the direction of CI Yield i.e., CI Yield and NBI High go up and down completely randomly.

Pair Corralation between CI Yield and NBI High

Assuming the 90 days trading horizon CI Yield is expected to generate 1.36 times less return on investment than NBI High. But when comparing it to its historical volatility, CI Yield Enhanced is 1.04 times less risky than NBI High. It trades about 0.03 of its potential returns per unit of risk. NBI High Yield is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,164  in NBI High Yield on September 15, 2024 and sell it today you would earn a total of  20.00  from holding NBI High Yield or generate 0.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

CI Yield Enhanced  vs.  NBI High Yield

CI Yield Enhanced

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in CI Yield Enhanced are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, CI Yield is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

NBI High Yield

Risk-Adjusted Performance

3 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NBI High Yield are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, NBI High is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with CI Yield and NBI High

The main advantage of trading using opposite CI Yield and NBI High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI Yield position performs unexpectedly, NBI High 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 High will offset losses from the drop in NBI High's long position.

The idea behind CI Yield Enhanced and NBI High Yield pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.