Correlation Between BetaPro SP and NBI High

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

By analyzing existing cross correlation between BetaPro SP 500 and NBI High Yield, you can compare the effects of market volatilities on BetaPro SP 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 BetaPro SP with a short position of NBI High. Check out your portfolio center. Please also check ongoing floating volatility patterns of BetaPro SP and NBI High.

Diversification Opportunities for BetaPro SP and NBI High

-0.58

Correlation Coefficient

BetaPro SP  NBI High

Excellent diversification

The 3 months correlation between BetaPro and NBI is -0.58. Overlapping area represents the amount of risk that can be diversified away by holding BetaPro SP 500 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 BetaPro SP 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 BetaPro SP 500 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 BetaPro SP i.e., BetaPro SP and NBI High go up and down completely randomly.

Pair Corralation between BetaPro SP and NBI High

Assuming the 90 days trading horizon BetaPro SP 500 is expected to under-perform the NBI High. But the etf apears to be less risky and, when comparing its historical volatility, BetaPro SP 500 is 4.3 times less risky than NBI High. The etf trades about -0.07 of its potential returns per unit of risk. The NBI High Yield is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  1,887  in NBI High Yield on October 26, 2024 and sell it today you would earn a total of  295.00  from holding NBI High Yield or generate 15.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	90.3%
Values	Daily Returns

BetaPro SP 500  vs.  NBI High Yield

BetaPro SP 500

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BetaPro SP 500 has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, BetaPro SP 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

4 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NBI High Yield are ranked lower than 4 (%) 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 current stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with BetaPro SP and NBI High

The main advantage of trading using opposite BetaPro SP and NBI High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BetaPro SP 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 BetaPro SP 500 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.

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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.