Correlation Between NBI Sustainable and IShares Global

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

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

Diversification Opportunities for NBI Sustainable and IShares Global

0.92

Correlation Coefficient

NBI Sustainable  IShares Global

Almost no diversification

The 3 months correlation between NBI and IShares is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding NBI Sustainable Canadian and iShares Global Infrastructure in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares Global Infra and NBI Sustainable 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 Sustainable Canadian are associated (or correlated) with IShares Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares Global Infra has no effect on the direction of NBI Sustainable i.e., NBI Sustainable and IShares Global go up and down completely randomly.

Pair Corralation between NBI Sustainable and IShares Global

Assuming the 90 days trading horizon NBI Sustainable Canadian is expected to generate 0.4 times more return on investment than IShares Global. However, NBI Sustainable Canadian is 2.48 times less risky than IShares Global. It trades about -0.17 of its potential returns per unit of risk. iShares Global Infrastructure is currently generating about -0.13 per unit of risk. If you would invest  4,413  in NBI Sustainable Canadian on September 23, 2024 and sell it today you would lose (55.00) from holding NBI Sustainable Canadian or give up 1.25% of portfolio value over 90 days.

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

NBI Sustainable Canadian  vs.  iShares Global Infrastructure

NBI Sustainable Canadian

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in NBI Sustainable Canadian are ranked lower than 5 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, NBI Sustainable is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

iShares Global Infra

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Infrastructure are ranked lower than 12 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating technical and fundamental indicators, IShares Global may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with NBI Sustainable and IShares Global

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

The idea behind NBI Sustainable Canadian and iShares Global Infrastructure 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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.