Correlation Between Neuberger Berman and Aqr Sustainable

Can any of the company-specific risk be diversified away by investing in both Neuberger Berman and Aqr Sustainable 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 Aqr Sustainable 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 Aqr Sustainable Long Short, you can compare the effects of market volatilities on Neuberger Berman and Aqr Sustainable 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 Aqr Sustainable. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neuberger Berman and Aqr Sustainable.

Diversification Opportunities for Neuberger Berman and Aqr Sustainable

0.61

Correlation Coefficient

Neuberger Berman  Aqr Sustainable

Poor diversification

The 3 months correlation between Neuberger and Aqr is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Neuberger Berman Long and Aqr Sustainable Long Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Sustainable Long 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 Aqr Sustainable. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Sustainable Long has no effect on the direction of Neuberger Berman i.e., Neuberger Berman and Aqr Sustainable go up and down completely randomly.

Pair Corralation between Neuberger Berman and Aqr Sustainable

Assuming the 90 days horizon Neuberger Berman Long is expected to under-perform the Aqr Sustainable. But the mutual fund apears to be less risky and, when comparing its historical volatility, Neuberger Berman Long is 2.26 times less risky than Aqr Sustainable. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Aqr Sustainable Long Short is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  1,324  in Aqr Sustainable Long Short on December 21, 2024 and sell it today you would earn a total of  22.00  from holding Aqr Sustainable Long Short or generate 1.66% return on investment over 90 days.

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

Neuberger Berman Long  vs.  Aqr Sustainable Long Short

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.

Aqr Sustainable Long

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Sustainable Long Short are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Aqr Sustainable 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 Aqr Sustainable

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

The idea behind Neuberger Berman Long and Aqr Sustainable Long Short 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.

Check out your portfolio center.

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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.