Correlation Between CI First and NBI High

Can any of the company-specific risk be diversified away by investing in both CI First 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 First 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 First Asset and NBI High Yield, you can compare the effects of market volatilities on CI First 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 First with a short position of NBI High. Check out your portfolio center. Please also check ongoing floating volatility patterns of CI First and NBI High.

Diversification Opportunities for CI First and NBI High

0.83

Correlation Coefficient

CI First  NBI High

Very poor diversification

The 3 months correlation between MXF and NBI is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding CI First Asset 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 First 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 First Asset 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 First i.e., CI First and NBI High go up and down completely randomly.

Pair Corralation between CI First and NBI High

Assuming the 90 days trading horizon CI First Asset is expected to generate 4.05 times more return on investment than NBI High. However, CI First is 4.05 times more volatile than NBI High Yield. It trades about 0.13 of its potential returns per unit of risk. NBI High Yield is currently generating about 0.05 per unit of risk. If you would invest  1,056  in CI First Asset on December 1, 2024 and sell it today you would earn a total of  125.00  from holding CI First Asset or generate 11.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Strong
Accuracy	98.36%
Values	Daily Returns

CI First Asset  vs.  NBI High Yield

CI First Asset

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in CI First Asset are ranked lower than 9 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, CI First may actually be approaching a critical reversion point that can send shares even higher in April 2025.

NBI High Yield

Risk-Adjusted Performance

Insignificant

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 First and NBI High

The main advantage of trading using opposite CI First and NBI High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if CI First 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 First Asset 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 Transaction History module to view history of all your transactions and understand their impact on performance.