Correlation Between American Funds and Neuberger Berman
Can any of the company-specific risk be diversified away by investing in both American Funds 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 American Funds and Neuberger Berman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Fundamental and Neuberger Berman Socially, you can compare the effects of market volatilities on American Funds 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 American Funds with a short position of Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Neuberger Berman.
Diversification Opportunities for American Funds and Neuberger Berman
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Neuberger is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Fundamental and Neuberger Berman Socially in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Socially and American Funds 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 American Funds Fundamental 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 Socially has no effect on the direction of American Funds i.e., American Funds and Neuberger Berman go up and down completely randomly.
Pair Corralation between American Funds and Neuberger Berman
Assuming the 90 days horizon American Funds is expected to generate 1.31 times less return on investment than Neuberger Berman. In addition to that, American Funds is 1.42 times more volatile than Neuberger Berman Socially. It trades about 0.2 of its total potential returns per unit of risk. Neuberger Berman Socially is currently generating about 0.37 per unit of volatility. If you would invest 4,876 in Neuberger Berman Socially on November 3, 2024 and sell it today you would earn a total of 260.00 from holding Neuberger Berman Socially or generate 5.33% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Fundamental vs. Neuberger Berman Socially
Performance |
| Timeline |
| American Funds Funda |
| Neuberger Berman Socially |
American Funds and Neuberger Berman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Neuberger Berman
The main advantage of trading using opposite American Funds and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds 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.| American Funds vs. World Energy Fund | American Funds vs. Energy Services Fund | American Funds vs. Alpsalerian Energy Infrastructure | American Funds vs. Icon Natural Resources |
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Check out your portfolio center.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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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