Correlation Between IShares Core and Neuberger Berman

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

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

Diversification Opportunities for IShares Core and Neuberger Berman

0.4

Correlation Coefficient

IShares Core  Neuberger Berman

Very weak diversification

The 3 months correlation between IShares and Neuberger is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core SP and Neuberger Berman Energy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Energy and IShares Core 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 iShares Core SP 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 Energy has no effect on the direction of IShares Core i.e., IShares Core and Neuberger Berman go up and down completely randomly.

Pair Corralation between IShares Core and Neuberger Berman

Considering the 90-day investment horizon IShares Core is expected to generate 473.0 times less return on investment than Neuberger Berman. But when comparing it to its historical volatility, iShares Core SP is 1.26 times less risky than Neuberger Berman. It trades about 0.0 of its potential returns per unit of risk. Neuberger Berman Energy is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  3,260  in Neuberger Berman Energy on November 19, 2024 and sell it today you would earn a total of  81.90  from holding Neuberger Berman Energy or generate 2.51% return on investment over 90 days.

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

iShares Core SP  vs.  Neuberger Berman Energy

iShares Core SP

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Core SP has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward-looking indicators, IShares Core is not utilizing all of its potentials. The newest stock price confusion, may contribute to short-horizon losses for the traders.

Neuberger Berman Energy

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Neuberger Berman Energy are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Neuberger Berman is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Core and Neuberger Berman

The main advantage of trading using opposite IShares Core and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core 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 iShares Core SP and Neuberger Berman Energy 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 Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.