Correlation Between Picton Mahoney and NBI Unconstrained

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

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

Diversification Opportunities for Picton Mahoney and NBI Unconstrained

-0.15

Correlation Coefficient

Picton Mahoney  NBI Unconstrained

Good diversification

The 3 months correlation between Picton and NBI is -0.15. Overlapping area represents the amount of risk that can be diversified away by holding Picton Mahoney Fortified and NBI Unconstrained Fixed in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Unconstrained Fixed and Picton Mahoney 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 Picton Mahoney Fortified are associated (or correlated) with NBI Unconstrained. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Unconstrained Fixed has no effect on the direction of Picton Mahoney i.e., Picton Mahoney and NBI Unconstrained go up and down completely randomly.

Pair Corralation between Picton Mahoney and NBI Unconstrained

Assuming the 90 days trading horizon Picton Mahoney Fortified is expected to under-perform the NBI Unconstrained. In addition to that, Picton Mahoney is 2.18 times more volatile than NBI Unconstrained Fixed. It trades about -0.07 of its total potential returns per unit of risk. NBI Unconstrained Fixed is currently generating about -0.04 per unit of volatility. If you would invest  2,115  in NBI Unconstrained Fixed on September 22, 2024 and sell it today you would lose (8.00) from holding NBI Unconstrained Fixed or give up 0.38% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	95.65%
Values	Daily Returns

Picton Mahoney Fortified  vs.  NBI Unconstrained Fixed

Picton Mahoney Fortified

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Picton Mahoney Fortified are ranked lower than 7 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, Picton Mahoney is not utilizing all of its potentials. The recent stock price disarray, may contribute to short-term losses for the investors.

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.

Pair Trading with Picton Mahoney and NBI Unconstrained

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

The idea behind Picton Mahoney Fortified and NBI Unconstrained Fixed 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.

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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.