Correlation Between Stone Ridge and Neuberger Berman

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

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

Diversification Opportunities for Stone Ridge and Neuberger Berman

0.91

Correlation Coefficient

Stone Ridge  Neuberger Berman

Almost no diversification

The 3 months correlation between Stone and Neuberger is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Stone Ridge Diversified and Neuberger Berman Floating in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Floating and Stone Ridge 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 Stone Ridge Diversified 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 Floating has no effect on the direction of Stone Ridge i.e., Stone Ridge and Neuberger Berman go up and down completely randomly.

Pair Corralation between Stone Ridge and Neuberger Berman

Assuming the 90 days horizon Stone Ridge Diversified is expected to generate 1.62 times more return on investment than Neuberger Berman. However, Stone Ridge is 1.62 times more volatile than Neuberger Berman Floating. It trades about 0.22 of its potential returns per unit of risk. Neuberger Berman Floating is currently generating about 0.26 per unit of risk. If you would invest  1,037  in Stone Ridge Diversified on October 25, 2024 and sell it today you would earn a total of  28.00  from holding Stone Ridge Diversified or generate 2.7% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	98.33%
Values	Daily Returns

Stone Ridge Diversified  vs.  Neuberger Berman Floating

Stone Ridge Diversified

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Stone Ridge Diversified are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Stone Ridge is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Neuberger Berman Floating

Risk-Adjusted Performance

20 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Neuberger Berman Floating are ranked lower than 20 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental 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 Stone Ridge and Neuberger Berman

The main advantage of trading using opposite Stone Ridge and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Stone Ridge 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 Stone Ridge Diversified and Neuberger Berman Floating 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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.