Correlation Between Picton Mahoney and NBI Liquid

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

Diversification Opportunities for Picton Mahoney and NBI Liquid

-0.33

Correlation Coefficient

Picton Mahoney  NBI Liquid

Very good diversification

The 3 months correlation between Picton and NBI is -0.33. Overlapping area represents the amount of risk that can be diversified away by holding Picton Mahoney Fortified and NBI Liquid Alternatives in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on NBI Liquid Alternatives 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 Liquid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of NBI Liquid Alternatives has no effect on the direction of Picton Mahoney i.e., Picton Mahoney and NBI Liquid go up and down completely randomly.

Pair Corralation between Picton Mahoney and NBI Liquid

Assuming the 90 days trading horizon Picton Mahoney Fortified is expected to under-perform the NBI Liquid. But the etf apears to be less risky and, when comparing its historical volatility, Picton Mahoney Fortified is 1.15 times less risky than NBI Liquid. The etf trades about -0.02 of its potential returns per unit of risk. The NBI Liquid Alternatives is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,201  in NBI Liquid Alternatives on December 27, 2024 and sell it today you would earn a total of  25.00  from holding NBI Liquid Alternatives or generate 1.14% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	98.41%
Values	Daily Returns

Picton Mahoney Fortified  vs.  NBI Liquid Alternatives

Picton Mahoney Fortified

Risk-Adjusted Performance

Very Weak

Over the last 90 days Picton Mahoney Fortified has generated negative risk-adjusted returns adding no value to investors with long positions. 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 Liquid Alternatives

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in NBI Liquid Alternatives are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of very healthy basic indicators, NBI Liquid 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 Liquid

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

The idea behind Picton Mahoney Fortified and NBI Liquid Alternatives 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.