Correlation Between Mackenzie Unconstrained and NBI Liquid

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

By analyzing existing cross correlation between Mackenzie Unconstrained Bond and NBI Liquid Alternatives, you can compare the effects of market volatilities on Mackenzie Unconstrained and NBI Liquid 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 Mackenzie Unconstrained with a short position of NBI Liquid. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mackenzie Unconstrained and NBI Liquid.

Diversification Opportunities for Mackenzie Unconstrained and NBI Liquid

0.25

Correlation Coefficient

Mackenzie Unconstrained  NBI Liquid

Modest diversification

The 3 months correlation between Mackenzie and NBI is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Mackenzie Unconstrained Bond and NBI Liquid Alternatives in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Liquid Alternatives and Mackenzie Unconstrained 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 Mackenzie Unconstrained Bond are associated (or correlated) with NBI Liquid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Liquid Alternatives has no effect on the direction of Mackenzie Unconstrained i.e., Mackenzie Unconstrained and NBI Liquid go up and down completely randomly.

Pair Corralation between Mackenzie Unconstrained and NBI Liquid

Assuming the 90 days trading horizon Mackenzie Unconstrained is expected to generate 3.57 times less return on investment than NBI Liquid. But when comparing it to its historical volatility, Mackenzie Unconstrained Bond is 2.87 times less risky than NBI Liquid. It trades about 0.05 of its potential returns per unit of risk. NBI Liquid Alternatives is currently generating about 0.06 of returns per unit of risk over similar time horizon. If you would invest  2,201  in NBI Liquid Alternatives on December 27, 2024 and sell it today you would earn a total of  51.00  from holding NBI Liquid Alternatives or generate 2.32% return on investment over 90 days.

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

Mackenzie Unconstrained Bond  vs.  NBI Liquid Alternatives

Mackenzie Unconstrained

Risk-Adjusted Performance

Insignificant

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

NBI Liquid Alternatives

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NBI Liquid Alternatives are ranked lower than 4 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, NBI Liquid is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Mackenzie Unconstrained and NBI Liquid

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

The idea behind Mackenzie Unconstrained Bond and NBI Liquid Alternatives 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.