Correlation Between Transamerica Financial and Neuberger Berman

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

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

Diversification Opportunities for Transamerica Financial and Neuberger Berman

0.23

Correlation Coefficient

Transamerica Financial  Neuberger Berman

Modest diversification

The 3 months correlation between Transamerica and NEUBERGER is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Transamerica Financial Life and Neuberger Berman Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Large and Transamerica Financial 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 Transamerica Financial Life 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 Large has no effect on the direction of Transamerica Financial i.e., Transamerica Financial and Neuberger Berman go up and down completely randomly.

Pair Corralation between Transamerica Financial and Neuberger Berman

Assuming the 90 days horizon Transamerica Financial is expected to generate 1.43 times less return on investment than Neuberger Berman. In addition to that, Transamerica Financial is 1.11 times more volatile than Neuberger Berman Large. It trades about 0.04 of its total potential returns per unit of risk. Neuberger Berman Large is currently generating about 0.06 per unit of volatility. If you would invest  4,506  in Neuberger Berman Large on December 23, 2024 and sell it today you would earn a total of  121.00  from holding Neuberger Berman Large or generate 2.69% return on investment over 90 days.

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

Transamerica Financial Life  vs.  Neuberger Berman Large

Transamerica Financial

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Transamerica Financial Life are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Transamerica Financial is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Neuberger Berman Large

Risk-Adjusted Performance

Modest

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

The main advantage of trading using opposite Transamerica Financial and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Transamerica Financial 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 Transamerica Financial Life and Neuberger Berman Large 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.