Correlation Between Neuberger Berman and Rational Defensive

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

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

Diversification Opportunities for Neuberger Berman and Rational Defensive

-0.39

Correlation Coefficient

Neuberger Berman  Rational Defensive

Very good diversification

The 3 months correlation between Neuberger and Rational is -0.39. Overlapping area represents the amount of risk that can be diversified away by holding Neuberger Berman Real and Rational Defensive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rational Defensive Growth 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 Real are associated (or correlated) with Rational Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rational Defensive Growth has no effect on the direction of Neuberger Berman i.e., Neuberger Berman and Rational Defensive go up and down completely randomly.

Pair Corralation between Neuberger Berman and Rational Defensive

Assuming the 90 days horizon Neuberger Berman is expected to generate 3.03 times less return on investment than Rational Defensive. In addition to that, Neuberger Berman is 1.04 times more volatile than Rational Defensive Growth. It trades about 0.04 of its total potential returns per unit of risk. Rational Defensive Growth is currently generating about 0.12 per unit of volatility. If you would invest  2,243  in Rational Defensive Growth on September 26, 2024 and sell it today you would earn a total of  1,800  from holding Rational Defensive Growth or generate 80.25% return on investment over 90 days.

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

Neuberger Berman Real  vs.  Rational Defensive Growth

Neuberger Berman Real

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neuberger Berman Real has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest unfluctuating 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.

Rational Defensive Growth

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Rational Defensive Growth are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Rational Defensive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Neuberger Berman and Rational Defensive

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

The idea behind Neuberger Berman Real and Rational Defensive Growth 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.