Correlation Between NBI Unconstrained and Mackenzie Floating

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

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

Diversification Opportunities for NBI Unconstrained and Mackenzie Floating

-0.36

Correlation Coefficient

NBI Unconstrained  Mackenzie Floating

Very good diversification

The 3 months correlation between NBI and Mackenzie is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding NBI Unconstrained Fixed and Mackenzie Floating Rate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mackenzie Floating Rate and NBI 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 NBI Unconstrained Fixed are associated (or correlated) with Mackenzie Floating. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mackenzie Floating Rate has no effect on the direction of NBI Unconstrained i.e., NBI Unconstrained and Mackenzie Floating go up and down completely randomly.

Pair Corralation between NBI Unconstrained and Mackenzie Floating

Assuming the 90 days trading horizon NBI Unconstrained is expected to generate 1.34 times less return on investment than Mackenzie Floating. In addition to that, NBI Unconstrained is 2.03 times more volatile than Mackenzie Floating Rate. It trades about 0.07 of its total potential returns per unit of risk. Mackenzie Floating Rate is currently generating about 0.18 per unit of volatility. If you would invest  1,530  in Mackenzie Floating Rate on October 5, 2024 and sell it today you would earn a total of  178.00  from holding Mackenzie Floating Rate or generate 11.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

NBI Unconstrained Fixed  vs.  Mackenzie Floating Rate

NBI Unconstrained Fixed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBI Unconstrained Fixed has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy basic indicators, NBI Unconstrained is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Mackenzie Floating Rate

Risk-Adjusted Performance

25 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Mackenzie Floating Rate are ranked lower than 25 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Mackenzie Floating is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with NBI Unconstrained and Mackenzie Floating

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

The idea behind NBI Unconstrained Fixed and Mackenzie Floating Rate 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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.