Correlation Between Brown Advisory and Neuberger Berman

Can any of the company-specific risk be diversified away by investing in both Brown Advisory and Neuberger Berman 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 Brown Advisory and Neuberger Berman into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Brown Advisory Flexible and Neuberger Berman Small, you can compare the effects of market volatilities on Brown Advisory and Neuberger Berman 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 Brown Advisory with a short position of Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Brown Advisory and Neuberger Berman.

Diversification Opportunities for Brown Advisory and Neuberger Berman

0.97

Correlation Coefficient

Brown Advisory  Neuberger Berman

Almost no diversification

The 3 months correlation between Brown and Neuberger is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Brown Advisory Flexible and Neuberger Berman Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Small and Brown Advisory 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 Brown Advisory Flexible are associated (or correlated) with Neuberger Berman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neuberger Berman Small has no effect on the direction of Brown Advisory i.e., Brown Advisory and Neuberger Berman go up and down completely randomly.

Pair Corralation between Brown Advisory and Neuberger Berman

Assuming the 90 days horizon Brown Advisory is expected to generate 1.16 times less return on investment than Neuberger Berman. But when comparing it to its historical volatility, Brown Advisory Flexible is 1.75 times less risky than Neuberger Berman. It trades about 0.19 of its potential returns per unit of risk. Neuberger Berman Small is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4,799  in Neuberger Berman Small on September 12, 2024 and sell it today you would earn a total of  476.00  from holding Neuberger Berman Small or generate 9.92% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.44%
Values	Daily Returns

Brown Advisory Flexible  vs.  Neuberger Berman Small

Brown Advisory Flexible

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Brown Advisory Flexible are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Brown Advisory may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Neuberger Berman Small

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neuberger Berman Small are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Neuberger Berman may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Brown Advisory and Neuberger Berman

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

The idea behind Brown Advisory Flexible and Neuberger Berman Small 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.