Correlation Between GM and Neuberger Berman

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

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

Diversification Opportunities for GM and Neuberger Berman

0.63

Correlation Coefficient

GM  Neuberger Berman

Poor diversification

The 3 months correlation between GM and Neuberger is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Neuberger Berman Dividend in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Dividend and GM 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 General Motors 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 Dividend has no effect on the direction of GM i.e., GM and Neuberger Berman go up and down completely randomly.

Pair Corralation between GM and Neuberger Berman

Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Neuberger Berman. In addition to that, GM is 4.89 times more volatile than Neuberger Berman Dividend. It trades about -0.15 of its total potential returns per unit of risk. Neuberger Berman Dividend is currently generating about 0.02 per unit of volatility. If you would invest  2,223  in Neuberger Berman Dividend on September 15, 2024 and sell it today you would earn a total of  4.00  from holding Neuberger Berman Dividend or generate 0.18% return on investment over 90 days.

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

General Motors  vs.  Neuberger Berman Dividend

General Motors

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in General Motors are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. In spite of very weak primary indicators, GM displayed solid returns over the last few months and may actually be approaching a breakup point.

Neuberger Berman Dividend

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neuberger Berman Dividend are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental 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 GM and Neuberger Berman

The main advantage of trading using opposite GM and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors and Neuberger Berman Dividend 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.