Correlation Between NBI Unconstrained and NBI Sustainable

Can any of the company-specific risk be diversified away by investing in both NBI Unconstrained and NBI Sustainable 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 NBI Sustainable 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 NBI Sustainable Global, you can compare the effects of market volatilities on NBI Unconstrained and NBI Sustainable 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 NBI Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of NBI Unconstrained and NBI Sustainable.

Diversification Opportunities for NBI Unconstrained and NBI Sustainable

0.68

Correlation Coefficient

NBI Unconstrained  NBI Sustainable

Poor diversification

The 3 months correlation between NBI and NBI is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding NBI Unconstrained Fixed and NBI Sustainable Global in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Sustainable Global 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 NBI Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Sustainable Global has no effect on the direction of NBI Unconstrained i.e., NBI Unconstrained and NBI Sustainable go up and down completely randomly.

Pair Corralation between NBI Unconstrained and NBI Sustainable

Assuming the 90 days trading horizon NBI Unconstrained Fixed is expected to under-perform the NBI Sustainable. But the etf apears to be less risky and, when comparing its historical volatility, NBI Unconstrained Fixed is 1.99 times less risky than NBI Sustainable. The etf trades about -0.06 of its potential returns per unit of risk. The NBI Sustainable Global is currently generating about -0.02 of returns per unit of risk over similar time horizon. If you would invest  4,319  in NBI Sustainable Global on October 20, 2024 and sell it today you would lose (45.00) from holding NBI Sustainable Global or give up 1.04% of portfolio value over 90 days.

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

NBI Unconstrained Fixed  vs.  NBI Sustainable Global

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.

NBI Sustainable Global

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days NBI Sustainable Global has generated negative risk-adjusted returns adding no value to investors with long positions. 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.

Pair Trading with NBI Unconstrained and NBI Sustainable

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

The idea behind NBI Unconstrained Fixed and NBI Sustainable Global 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.