Correlation Between Neuberger Berman and Emerging Markets

Can any of the company-specific risk be diversified away by investing in both Neuberger Berman and Emerging Markets 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 Emerging Markets 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 Emerging Markets Growth, you can compare the effects of market volatilities on Neuberger Berman and Emerging Markets 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 Emerging Markets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neuberger Berman and Emerging Markets.

Diversification Opportunities for Neuberger Berman and Emerging Markets

0.68

Correlation Coefficient

Neuberger Berman  Emerging Markets

Poor diversification

The 3 months correlation between Neuberger and Emerging is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Neuberger Berman Intermediate and Emerging Markets Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Markets Growth 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 Emerging Markets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Markets Growth has no effect on the direction of Neuberger Berman i.e., Neuberger Berman and Emerging Markets go up and down completely randomly.

Pair Corralation between Neuberger Berman and Emerging Markets

Assuming the 90 days horizon Neuberger Berman Intermediate is expected to under-perform the Emerging Markets. But the mutual fund apears to be less risky and, when comparing its historical volatility, Neuberger Berman Intermediate is 1.88 times less risky than Emerging Markets. The mutual fund trades about -0.35 of its potential returns per unit of risk. The Emerging Markets Growth is currently generating about -0.14 of returns per unit of risk over similar time horizon. If you would invest  690.00  in Emerging Markets Growth on September 29, 2024 and sell it today you would lose (14.00) from holding Emerging Markets Growth or give up 2.03% of portfolio value over 90 days.

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

Neuberger Berman Intermediate  vs.  Emerging Markets Growth

Neuberger Berman Int

Risk-Adjusted Performance

0 of 100

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.

Emerging Markets Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Emerging Markets Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical and fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Neuberger Berman and Emerging Markets

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

The idea behind Neuberger Berman Intermediate and Emerging Markets Growth 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.