Correlation Between Western Asset and Neuberger Berman

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

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

Diversification Opportunities for Western Asset and Neuberger Berman

0.6

Correlation Coefficient

Western Asset  Neuberger Berman

Poor diversification

The 3 months correlation between Western and Neuberger is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Global and Neuberger Berman Mlp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Mlp and Western Asset 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 Western Asset Global 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 Mlp has no effect on the direction of Western Asset i.e., Western Asset and Neuberger Berman go up and down completely randomly.

Pair Corralation between Western Asset and Neuberger Berman

Considering the 90-day investment horizon Western Asset Global is expected to generate 0.51 times more return on investment than Neuberger Berman. However, Western Asset Global is 1.97 times less risky than Neuberger Berman. It trades about 0.14 of its potential returns per unit of risk. Neuberger Berman Mlp is currently generating about 0.05 per unit of risk. If you would invest  653.00  in Western Asset Global on December 2, 2024 and sell it today you would earn a total of  21.00  from holding Western Asset Global or generate 3.22% return on investment over 90 days.

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

Western Asset Global  vs.  Neuberger Berman Mlp

Western Asset Global

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Western Asset Global are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. Despite fairly strong technical indicators, Western Asset is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Neuberger Berman Mlp

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neuberger Berman Mlp has generated negative risk-adjusted returns adding no value to fund investors. Despite quite persistent primary indicators, Neuberger Berman is not utilizing all of its potentials. The latest stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Western Asset and Neuberger Berman

The main advantage of trading using opposite Western Asset and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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 Western Asset Global and Neuberger Berman Mlp 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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.