Correlation Between Cardinal Small and Neuberger Berman

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

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

Diversification Opportunities for Cardinal Small and Neuberger Berman

0.0

Correlation Coefficient

Cardinal Small  Neuberger Berman

Pay attention - limited upside

The 3 months correlation between Cardinal and Neuberger is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Cardinal Small Cap and Neuberger Berman Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Equity and Cardinal Small 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 Cardinal Small Cap 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 Equity has no effect on the direction of Cardinal Small i.e., Cardinal Small and Neuberger Berman go up and down completely randomly.

Pair Corralation between Cardinal Small and Neuberger Berman

Assuming the 90 days horizon Cardinal Small Cap is expected to generate 0.17 times more return on investment than Neuberger Berman. However, Cardinal Small Cap is 5.94 times less risky than Neuberger Berman. It trades about -0.18 of its potential returns per unit of risk. Neuberger Berman Equity is currently generating about -0.06 per unit of risk. If you would invest  1,478  in Cardinal Small Cap on October 3, 2024 and sell it today you would lose (34.00) from holding Cardinal Small Cap or give up 2.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Cardinal Small Cap  vs.  Neuberger Berman Equity

Cardinal Small Cap

Risk-Adjusted Performance

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Very Weak

Over the last 90 days Cardinal Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Cardinal Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Neuberger Berman Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neuberger Berman Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Cardinal Small and Neuberger Berman

The main advantage of trading using opposite Cardinal Small and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cardinal Small 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 Cardinal Small Cap and Neuberger Berman Equity 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.