Correlation Between Neuberger Berman and Smead Value

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

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

Diversification Opportunities for Neuberger Berman and Smead Value

0.31

Correlation Coefficient

Neuberger Berman  Smead Value

Weak diversification

The 3 months correlation between Neuberger and Smead is 0.31. Overlapping area represents the amount of risk that can be diversified away by holding Neuberger Berman Large and Smead Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smead Value Fund and Neuberger Berman 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 Neuberger Berman Large are associated (or correlated) with Smead Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smead Value Fund has no effect on the direction of Neuberger Berman i.e., Neuberger Berman and Smead Value go up and down completely randomly.

Pair Corralation between Neuberger Berman and Smead Value

Assuming the 90 days horizon Neuberger Berman Large is expected to generate 0.74 times more return on investment than Smead Value. However, Neuberger Berman Large is 1.35 times less risky than Smead Value. It trades about 0.07 of its potential returns per unit of risk. Smead Value Fund is currently generating about -0.05 per unit of risk. If you would invest  4,473  in Neuberger Berman Large on December 29, 2024 and sell it today you would earn a total of  135.00  from holding Neuberger Berman Large or generate 3.02% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.39%
Values	Daily Returns

Neuberger Berman Large  vs.  Smead Value Fund

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 forward indicators, Neuberger Berman is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Smead Value Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Smead Value Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Smead Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Neuberger Berman and Smead Value

The main advantage of trading using opposite Neuberger Berman and Smead Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neuberger Berman position performs unexpectedly, Smead Value 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 Smead Value will offset losses from the drop in Smead Value's long position.

The idea behind Neuberger Berman Large and Smead Value Fund 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.