Correlation Between Forstrong Global and NBI High

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

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

Diversification Opportunities for Forstrong Global and NBI High

0.23

Correlation Coefficient

Forstrong Global  NBI High

Modest diversification

The 3 months correlation between Forstrong and NBI is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Forstrong Global Income 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 Forstrong 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 Forstrong Global Income 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 Forstrong Global i.e., Forstrong Global and NBI High go up and down completely randomly.

Pair Corralation between Forstrong Global and NBI High

Assuming the 90 days trading horizon Forstrong Global Income is expected to under-perform the NBI High. But the etf apears to be less risky and, when comparing its historical volatility, Forstrong Global Income is 1.07 times less risky than NBI High. The etf trades about -0.2 of its potential returns per unit of risk. The NBI High Yield is currently generating about -0.18 of returns per unit of risk over similar time horizon. If you would invest  2,190  in NBI High Yield on October 4, 2024 and sell it today you would lose (29.00) from holding NBI High Yield or give up 1.32% of portfolio value over 90 days.

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

Forstrong Global Income  vs.  NBI High Yield

Forstrong Global Income

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Forstrong Global Income has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, Forstrong Global 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

0 of 100

Very Weak

Over the last 90 days NBI High Yield has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, NBI High is not utilizing all of its potentials. The current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Forstrong Global and NBI High

The main advantage of trading using opposite Forstrong Global and NBI High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Forstrong Global 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 Forstrong Global Income 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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.