Correlation Between Pimco Rae and Neuberger Berman

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

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

Diversification Opportunities for Pimco Rae and Neuberger Berman

0.46

Correlation Coefficient

Pimco Rae  Neuberger Berman

Very weak diversification

The 3 months correlation between Pimco and Neuberger is 0.46. Overlapping area represents the amount of risk that can be diversified away by holding Pimco Rae Worldwide 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 Pimco Rae 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 Pimco Rae Worldwide 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 Pimco Rae i.e., Pimco Rae and Neuberger Berman go up and down completely randomly.

Pair Corralation between Pimco Rae and Neuberger Berman

Assuming the 90 days horizon Pimco Rae is expected to generate 1.81 times less return on investment than Neuberger Berman. In addition to that, Pimco Rae is 1.42 times more volatile than Neuberger Berman Long. It trades about 0.08 of its total potential returns per unit of risk. Neuberger Berman Long is currently generating about 0.2 per unit of volatility. If you would invest  1,830  in Neuberger Berman Long on September 12, 2024 and sell it today you would earn a total of  59.00  from holding Neuberger Berman Long or generate 3.22% return on investment over 90 days.

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

Pimco Rae Worldwide  vs.  Neuberger Berman Long

Pimco Rae Worldwide

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Rae Worldwide are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Pimco Rae 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

15 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Neuberger Berman Long are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Pimco Rae and Neuberger Berman

The main advantage of trading using opposite Pimco Rae and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Pimco Rae 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 Pimco Rae Worldwide 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.