Correlation Between Neuberger Berman and The Merger

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

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

Diversification Opportunities for Neuberger Berman and The Merger

0.24

Correlation Coefficient

Neuberger Berman  The Merger

Modest diversification

The 3 months correlation between Neuberger and The is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Neuberger Berman Long and The Merger Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Merger 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 Long are associated (or correlated) with The Merger. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Merger Fund has no effect on the direction of Neuberger Berman i.e., Neuberger Berman and The Merger go up and down completely randomly.

Pair Corralation between Neuberger Berman and The Merger

Assuming the 90 days horizon Neuberger Berman Long is expected to under-perform the The Merger. In addition to that, Neuberger Berman is 1.88 times more volatile than The Merger Fund. It trades about -0.02 of its total potential returns per unit of risk. The Merger Fund is currently generating about 0.19 per unit of volatility. If you would invest  1,686  in The Merger Fund on December 30, 2024 and sell it today you would earn a total of  42.00  from holding The Merger Fund or generate 2.49% 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 Long  vs.  The Merger Fund

Neuberger Berman Long

Risk-Adjusted Performance

Very Weak

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

Merger Fund

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in The Merger Fund are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, The Merger 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 The Merger

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

The idea behind Neuberger Berman Long and The Merger 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.