Correlation Between Western Asset and Neuberger Berman

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

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

Diversification Opportunities for Western Asset and Neuberger Berman

-0.13

Correlation Coefficient

Western Asset  Neuberger Berman

Good diversification

The 3 months correlation between Western and Neuberger is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Neuberger Berman Next in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Next and Western Asset 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 Western Asset 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 Next has no effect on the direction of Western Asset i.e., Western Asset and Neuberger Berman go up and down completely randomly.

Pair Corralation between Western Asset and Neuberger Berman

Considering the 90-day investment horizon Western Asset is expected to generate 17.7 times less return on investment than Neuberger Berman. But when comparing it to its historical volatility, Western Asset Diversified is 1.55 times less risky than Neuberger Berman. It trades about 0.01 of its potential returns per unit of risk. Neuberger Berman Next is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,215  in Neuberger Berman Next on August 30, 2024 and sell it today you would earn a total of  98.00  from holding Neuberger Berman Next or generate 8.07% return on investment over 90 days.

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

Western Asset Diversified  vs.  Neuberger Berman Next

Western Asset Diversified

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Western Asset Diversified has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong fundamental indicators, Western Asset is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Neuberger Berman Next

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Neuberger Berman Next are ranked lower than 10 (%) of all global equities and portfolios over the last 90 days. Despite nearly unfluctuating basic indicators, Neuberger Berman may actually be approaching a critical reversion point that can send shares even higher in December 2024.

Pair Trading with Western Asset and Neuberger Berman

The main advantage of trading using opposite Western Asset and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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 Western Asset Diversified and Neuberger Berman Next 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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..