Correlation Between The National and Neuberger Berman

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

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

Diversification Opportunities for The National and Neuberger Berman

0.18

Correlation Coefficient

The National  Neuberger Berman

Average diversification

The 3 months correlation between The and Neuberger is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding The National Tax Free and Neuberger Berman Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Floating and The National 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 The National Tax Free 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 Floating has no effect on the direction of The National i.e., The National and Neuberger Berman go up and down completely randomly.

Pair Corralation between The National and Neuberger Berman

Assuming the 90 days horizon The National is expected to generate 4.17 times less return on investment than Neuberger Berman. In addition to that, The National is 1.21 times more volatile than Neuberger Berman Floating. It trades about 0.04 of its total potential returns per unit of risk. Neuberger Berman Floating is currently generating about 0.19 per unit of volatility. If you would invest  910.00  in Neuberger Berman Floating on October 7, 2024 and sell it today you would earn a total of  34.00  from holding Neuberger Berman Floating or generate 3.74% return on investment over 90 days.

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

The National Tax Free  vs.  Neuberger Berman Floating

National Tax

Risk-Adjusted Performance

0 of 100

Very Weak

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

Neuberger Berman Floating

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Neuberger Berman Floating are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Neuberger Berman is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with The National and Neuberger Berman

The main advantage of trading using opposite The National and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if The National 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 The National Tax Free and Neuberger Berman Floating 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.