Correlation Between NBI Liquid and IShares Global

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

Diversification Opportunities for NBI Liquid and IShares Global

-0.89

Correlation Coefficient

NBI Liquid  IShares Global

Pay attention - limited upside

The 3 months correlation between NBI and IShares is -0.89. Overlapping area represents the amount of risk that can be diversified away by holding NBI Liquid Alternatives 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 Liquid 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 Liquid Alternatives 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 Liquid i.e., NBI Liquid and IShares Global go up and down completely randomly.

Pair Corralation between NBI Liquid and IShares Global

Assuming the 90 days trading horizon NBI Liquid Alternatives is expected to under-perform the IShares Global. But the etf apears to be less risky and, when comparing its historical volatility, NBI Liquid Alternatives is 1.49 times less risky than IShares Global. The etf trades about -0.19 of its potential returns per unit of risk. The iShares Global Infrastructure is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  4,644  in iShares Global Infrastructure on September 29, 2024 and sell it today you would earn a total of  303.00  from holding iShares Global Infrastructure or generate 6.52% return on investment over 90 days.

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

NBI Liquid Alternatives  vs.  iShares Global Infrastructure

NBI Liquid Alternatives

Risk-Adjusted Performance

0 of 100

Very Weak

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

iShares Global Infra

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in iShares Global Infrastructure are ranked lower than 10 (%) 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 Liquid and IShares Global

The main advantage of trading using opposite NBI Liquid and IShares Global positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NBI Liquid 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 Liquid Alternatives 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..