Correlation Between IShares Consumer and Neuberger Berman

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

Diversification Opportunities for IShares Consumer and Neuberger Berman

0.67

Correlation Coefficient

IShares Consumer  Neuberger Berman

Poor diversification

The 3 months correlation between IShares and Neuberger is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding iShares Consumer Discretionary and Neuberger Berman Next in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Next and IShares Consumer 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 Consumer Discretionary 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 Next has no effect on the direction of IShares Consumer i.e., IShares Consumer and Neuberger Berman go up and down completely randomly.

Pair Corralation between IShares Consumer and Neuberger Berman

Considering the 90-day investment horizon iShares Consumer Discretionary is expected to under-perform the Neuberger Berman. In addition to that, IShares Consumer is 1.2 times more volatile than Neuberger Berman Next. It trades about -0.11 of its total potential returns per unit of risk. Neuberger Berman Next is currently generating about -0.03 per unit of volatility. If you would invest  2,489  in Neuberger Berman Next on December 30, 2024 and sell it today you would lose (54.00) from holding Neuberger Berman Next or give up 2.17% of portfolio value over 90 days.

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

iShares Consumer Discretionary  vs.  Neuberger Berman Next

iShares Consumer Dis

Risk-Adjusted Performance

Very Weak

Over the last 90 days iShares Consumer Discretionary has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest conflicting performance, the Etf's basic indicators remain sound and the latest tumult on Wall Street may also be a sign of longer-term gains for the fund shareholders.

Neuberger Berman Next

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neuberger Berman Next has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound fundamental indicators, Neuberger Berman is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with IShares Consumer and Neuberger Berman

The main advantage of trading using opposite IShares Consumer and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Consumer 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 Consumer Discretionary and Neuberger Berman Next 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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.