Correlation Between Pacific Capital and Neuberger Berman

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

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

Diversification Opportunities for Pacific Capital and Neuberger Berman

-0.05

Correlation Coefficient

Pacific Capital  Neuberger Berman

Good diversification

The 3 months correlation between Pacific and Neuberger is -0.05. Overlapping area represents the amount of risk that can be diversified away by holding Pacific Capital Tax Free and Neuberger Berman Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Long and Pacific Capital 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 Pacific Capital Tax Free are associated (or correlated) with Neuberger Berman. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Neuberger Berman Long has no effect on the direction of Pacific Capital i.e., Pacific Capital and Neuberger Berman go up and down completely randomly.

Pair Corralation between Pacific Capital and Neuberger Berman

Assuming the 90 days horizon Pacific Capital Tax Free is expected to under-perform the Neuberger Berman. But the mutual fund apears to be less risky and, when comparing its historical volatility, Pacific Capital Tax Free is 2.4 times less risky than Neuberger Berman. The mutual fund trades about -0.35 of its potential returns per unit of risk. The Neuberger Berman Long is currently generating about -0.06 of returns per unit of risk over similar time horizon. If you would invest  1,855  in Neuberger Berman Long on October 4, 2024 and sell it today you would lose (9.00) from holding Neuberger Berman Long or give up 0.49% of portfolio value over 90 days.

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

Pacific Capital Tax Free  vs.  Neuberger Berman Long

Pacific Capital Tax

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Pacific Capital Tax Free has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pacific Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Neuberger Berman Long

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neuberger Berman Long are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Neuberger Berman is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Pacific Capital and Neuberger Berman

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

The idea behind Pacific Capital Tax Free and Neuberger Berman Long 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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.