Correlation Between Neuberger Berman and Morgan Stanley

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

By analyzing existing cross correlation between Neuberger Berman Next and Morgan Stanley Emerging, you can compare the effects of market volatilities on Neuberger Berman and Morgan Stanley 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 Morgan Stanley. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neuberger Berman and Morgan Stanley.

Diversification Opportunities for Neuberger Berman and Morgan Stanley

0.36

Correlation Coefficient

Neuberger Berman  Morgan Stanley

Weak diversification

The 3 months correlation between Neuberger and Morgan is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Neuberger Berman Next and Morgan Stanley Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Morgan Stanley Emerging 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 Next are associated (or correlated) with Morgan Stanley. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Morgan Stanley Emerging has no effect on the direction of Neuberger Berman i.e., Neuberger Berman and Morgan Stanley go up and down completely randomly.

Pair Corralation between Neuberger Berman and Morgan Stanley

Given the investment horizon of 90 days Neuberger Berman Next is expected to generate 1.16 times more return on investment than Morgan Stanley. However, Neuberger Berman is 1.16 times more volatile than Morgan Stanley Emerging. It trades about 0.24 of its potential returns per unit of risk. Morgan Stanley Emerging is currently generating about 0.14 per unit of risk. If you would invest  1,268  in Neuberger Berman Next on September 2, 2024 and sell it today you would earn a total of  50.00  from holding Neuberger Berman Next or generate 3.94% return on investment over 90 days.

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

Neuberger Berman Next  vs.  Morgan Stanley Emerging

Neuberger Berman Next

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neuberger Berman Next are ranked lower than 14 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Neuberger Berman may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Morgan Stanley Emerging

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Morgan Stanley Emerging are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Morgan Stanley is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Pair Trading with Neuberger Berman and Morgan Stanley

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

The idea behind Neuberger Berman Next and Morgan Stanley Emerging 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.