Correlation Between Small Company and Neuberger Berman

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

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

Diversification Opportunities for Small Company and Neuberger Berman

0.54

Correlation Coefficient

Small Company  Neuberger Berman

Very weak diversification

The 3 months correlation between Small and Neuberger is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth and Neuberger Berman Focus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Focus and Small Company 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 Small Pany 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 Focus has no effect on the direction of Small Company i.e., Small Company and Neuberger Berman go up and down completely randomly.

Pair Corralation between Small Company and Neuberger Berman

Assuming the 90 days horizon Small Pany Growth is expected to under-perform the Neuberger Berman. In addition to that, Small Company is 2.0 times more volatile than Neuberger Berman Focus. It trades about -0.08 of its total potential returns per unit of risk. Neuberger Berman Focus is currently generating about -0.01 per unit of volatility. If you would invest  3,088  in Neuberger Berman Focus on December 21, 2024 and sell it today you would lose (40.00) from holding Neuberger Berman Focus or give up 1.3% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	98.33%
Values	Daily Returns

Small Pany Growth  vs.  Neuberger Berman Focus

Small Pany Growth

Risk-Adjusted Performance

Very Weak

Over the last 90 days Small Pany Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Neuberger Berman Focus

Risk-Adjusted Performance

Very Weak

Over the last 90 days Neuberger Berman Focus has generated negative risk-adjusted returns adding no value to fund investors. 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 Small Company and Neuberger Berman

The main advantage of trading using opposite Small Company and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Company 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 Small Pany Growth and Neuberger Berman Focus 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.