Correlation Between AGFiQ Market and NBI Liquid

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

By analyzing existing cross correlation between AGFiQ Market Neutral and NBI Liquid Alternatives, you can compare the effects of market volatilities on AGFiQ Market 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 AGFiQ Market with a short position of NBI Liquid. Check out your portfolio center. Please also check ongoing floating volatility patterns of AGFiQ Market and NBI Liquid.

Diversification Opportunities for AGFiQ Market and NBI Liquid

0.75

Correlation Coefficient

AGFiQ Market  NBI Liquid

Poor diversification

The 3 months correlation between AGFiQ and NBI is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding AGFiQ Market Neutral 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 AGFiQ Market 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 AGFiQ Market Neutral 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 AGFiQ Market i.e., AGFiQ Market and NBI Liquid go up and down completely randomly.

Pair Corralation between AGFiQ Market and NBI Liquid

Assuming the 90 days trading horizon AGFiQ Market Neutral is expected to under-perform the NBI Liquid. In addition to that, AGFiQ Market is 1.51 times more volatile than NBI Liquid Alternatives. It trades about -0.18 of its total potential returns per unit of risk. NBI Liquid Alternatives is currently generating about -0.16 per unit of volatility. If you would invest  2,324  in NBI Liquid Alternatives on September 2, 2024 and sell it today you would lose (120.00) from holding NBI Liquid Alternatives or give up 5.16% of portfolio value over 90 days.

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

AGFiQ Market Neutral  vs.  NBI Liquid Alternatives

AGFiQ Market Neutral

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days AGFiQ Market Neutral has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest unfluctuating performance, the Etf's basic indicators remain healthy and the recent disarray on Wall Street may also be a sign of long period gains for the ETF investors.

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.

Pair Trading with AGFiQ Market and NBI Liquid

The main advantage of trading using opposite AGFiQ Market and NBI Liquid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AGFiQ Market 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 AGFiQ Market Neutral 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 Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.