Correlation Between Fidelity Small and Neuberger Berman

Can any of the company-specific risk be diversified away by investing in both Fidelity 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 Fidelity 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 Fidelity Small Cap and Neuberger Berman Genesis, you can compare the effects of market volatilities on Fidelity 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 Fidelity Small with a short position of Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity Small and Neuberger Berman.

Diversification Opportunities for Fidelity Small and Neuberger Berman

0.86

Correlation Coefficient

Fidelity Small  Neuberger Berman

Very poor diversification

The 3 months correlation between Fidelity and Neuberger is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity Small Cap and Neuberger Berman Genesis in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Genesis and Fidelity 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 Fidelity 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 Genesis has no effect on the direction of Fidelity Small i.e., Fidelity Small and Neuberger Berman go up and down completely randomly.

Pair Corralation between Fidelity Small and Neuberger Berman

Assuming the 90 days horizon Fidelity Small Cap is expected to generate 1.27 times more return on investment than Neuberger Berman. However, Fidelity Small is 1.27 times more volatile than Neuberger Berman Genesis. It trades about -0.16 of its potential returns per unit of risk. Neuberger Berman Genesis is currently generating about -0.24 per unit of risk. If you would invest  3,690  in Fidelity Small Cap on November 28, 2024 and sell it today you would lose (407.00) from holding Fidelity Small Cap or give up 11.03% of portfolio value over 90 days.

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

Fidelity Small Cap  vs.  Neuberger Berman Genesis

Fidelity Small Cap

Risk-Adjusted Performance

Very Weak

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

Neuberger Berman Genesis

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neuberger Berman Genesis has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in March 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Pair Trading with Fidelity Small and Neuberger Berman

The main advantage of trading using opposite Fidelity Small and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity 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 Fidelity Small Cap and Neuberger Berman Genesis 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.