Correlation Between Mid Cap and Neuberger Berman

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

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

Diversification Opportunities for Mid Cap and Neuberger Berman

0.9

Correlation Coefficient

Mid Cap  Neuberger Berman

Almost no diversification

The 3 months correlation between Mid and Neuberger is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap Growth and Neuberger Berman Guardian in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Guardian and Mid Cap 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 Mid Cap Growth 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 Guardian has no effect on the direction of Mid Cap i.e., Mid Cap and Neuberger Berman go up and down completely randomly.

Pair Corralation between Mid Cap and Neuberger Berman

Assuming the 90 days horizon Mid Cap is expected to generate 1.32 times less return on investment than Neuberger Berman. In addition to that, Mid Cap is 1.1 times more volatile than Neuberger Berman Guardian. It trades about 0.08 of its total potential returns per unit of risk. Neuberger Berman Guardian is currently generating about 0.12 per unit of volatility. If you would invest  1,817  in Neuberger Berman Guardian on September 14, 2024 and sell it today you would earn a total of  1,324  from holding Neuberger Berman Guardian or generate 72.87% return on investment over 90 days.

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

Mid Cap Growth  vs.  Neuberger Berman Guardian

Mid Cap Growth

Risk-Adjusted Performance

15 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap Growth are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Mid Cap showed solid returns over the last few months and may actually be approaching a breakup point.

Neuberger Berman Guardian

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neuberger Berman Guardian are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Neuberger Berman may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Mid Cap and Neuberger Berman

The main advantage of trading using opposite Mid Cap and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid Cap 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 Mid Cap Growth and Neuberger Berman Guardian 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.