Correlation Between NBI Global and NBI High
Can any of the company-specific risk be diversified away by investing in both NBI 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 NBI 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 NBI Global Real and NBI High Yield, you can compare the effects of market volatilities on NBI 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 NBI Global with a short position of NBI High. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBI Global and NBI High.
Diversification Opportunities for NBI Global and NBI High
0.05 | Correlation Coefficient |
Significant diversification
The 3 months correlation between NBI and NBI is 0.05. Overlapping area represents the amount of risk that can be diversified away by holding NBI Global Real 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 NBI 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 NBI Global Real 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 NBI Global i.e., NBI Global and NBI High go up and down completely randomly.
Pair Corralation between NBI Global and NBI High
Assuming the 90 days trading horizon NBI Global Real is expected to under-perform the NBI High. In addition to that, NBI Global is 2.39 times more volatile than NBI High Yield. It trades about -0.03 of its total potential returns per unit of risk. NBI High Yield is currently generating about 0.04 per unit of volatility. If you would invest 2,169 in NBI High Yield on December 3, 2024 and sell it today you would earn a total of 19.00 from holding NBI High Yield or generate 0.88% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Insignificant |
Accuracy | 98.39% |
Values | Daily Returns |
NBI Global Real vs. NBI High Yield
Performance |
Timeline |
NBI Global Real |
NBI High Yield |
NBI Global and NBI High Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with NBI Global and NBI High
The main advantage of trading using opposite NBI Global and NBI High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBI 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.NBI Global vs. NBI Active Canadian | NBI Global vs. NBI Liquid Alternatives | NBI Global vs. NBI Sustainable Canadian |
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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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