Correlation Between Rational Defensive and Neuberger Berman

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

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

Diversification Opportunities for Rational Defensive and Neuberger Berman

0.3

Correlation Coefficient

Rational Defensive  Neuberger Berman

Weak diversification

The 3 months correlation between Rational and Neuberger is 0.3. Overlapping area represents the amount of risk that can be diversified away by holding Rational Defensive Growth and Neuberger Berman Absolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Absolute and Rational Defensive 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 Rational Defensive Growth 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 Absolute has no effect on the direction of Rational Defensive i.e., Rational Defensive and Neuberger Berman go up and down completely randomly.

Pair Corralation between Rational Defensive and Neuberger Berman

Assuming the 90 days horizon Rational Defensive Growth is expected to under-perform the Neuberger Berman. In addition to that, Rational Defensive is 5.88 times more volatile than Neuberger Berman Absolute. It trades about -0.16 of its total potential returns per unit of risk. Neuberger Berman Absolute is currently generating about 0.05 per unit of volatility. If you would invest  1,113  in Neuberger Berman Absolute on October 11, 2024 and sell it today you would earn a total of  2.00  from holding Neuberger Berman Absolute or generate 0.18% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Rational Defensive Growth  vs.  Neuberger Berman Absolute

Rational Defensive Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rational Defensive Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Rational Defensive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Neuberger Berman Absolute

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neuberger Berman Absolute are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong 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 Rational Defensive and Neuberger Berman

The main advantage of trading using opposite Rational Defensive and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Rational Defensive 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 Rational Defensive Growth and Neuberger Berman Absolute 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.