Correlation Between Neuberger Berman and Bridge Builder

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

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

Diversification Opportunities for Neuberger Berman and Bridge Builder

0.54

Correlation Coefficient

Neuberger Berman  Bridge Builder

Very weak diversification

The 3 months correlation between Neuberger and Bridge is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Neuberger Berman Intermediate and Bridge Builder Municipal in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Bridge Builder Municipal and Neuberger Berman 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 Neuberger Berman Intermediate are associated (or correlated) with Bridge Builder. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Bridge Builder Municipal has no effect on the direction of Neuberger Berman i.e., Neuberger Berman and Bridge Builder go up and down completely randomly.

Pair Corralation between Neuberger Berman and Bridge Builder

Assuming the 90 days horizon Neuberger Berman Intermediate is expected to under-perform the Bridge Builder. In addition to that, Neuberger Berman is 1.99 times more volatile than Bridge Builder Municipal. It trades about -0.12 of its total potential returns per unit of risk. Bridge Builder Municipal is currently generating about 0.01 per unit of volatility. If you would invest  978.00  in Bridge Builder Municipal on December 27, 2024 and sell it today you would earn a total of  1.00  from holding Bridge Builder Municipal or generate 0.1% return on investment over 90 days.

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

Neuberger Berman Intermediate  vs.  Bridge Builder Municipal

Neuberger Berman Int

Risk-Adjusted Performance

Very Weak

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

Bridge Builder Municipal

Risk-Adjusted Performance

Insignificant

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

Pair Trading with Neuberger Berman and Bridge Builder

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

The idea behind Neuberger Berman Intermediate and Bridge Builder Municipal 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.