Correlation Between First Trust and Neuberger Berman
Can any of the company-specific risk be diversified away by investing in both First Trust 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 First Trust and Neuberger Berman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between First Trust TCW and Neuberger Berman ETF, you can compare the effects of market volatilities on First Trust 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 First Trust with a short position of Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Trust and Neuberger Berman.
Diversification Opportunities for First Trust and Neuberger Berman
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between First and Neuberger is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding First Trust TCW and Neuberger Berman ETF in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman ETF and First Trust 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 First Trust TCW 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 ETF has no effect on the direction of First Trust i.e., First Trust and Neuberger Berman go up and down completely randomly.
Pair Corralation between First Trust and Neuberger Berman
Given the investment horizon of 90 days First Trust is expected to generate 244.42 times less return on investment than Neuberger Berman. But when comparing it to its historical volatility, First Trust TCW is 165.28 times less risky than Neuberger Berman. It trades about 0.07 of its potential returns per unit of risk. Neuberger Berman ETF is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 0.00 in Neuberger Berman ETF on August 26, 2024 and sell it today you would earn a total of 5,121 from holding Neuberger Berman ETF or generate 9.223372036854776E16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 27.66% |
| Values | Daily Returns |
First Trust TCW vs. Neuberger Berman ETF
Performance |
| Timeline |
| First Trust TCW |
| Neuberger Berman ETF |
First Trust and Neuberger Berman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with First Trust and Neuberger Berman
The main advantage of trading using opposite First Trust and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if First Trust 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.| First Trust vs. First Trust TCW | First Trust vs. SPDR Bloomberg Barclays | First Trust vs. First Trust Short | First Trust vs. First Trust Emerging |
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 Equity Valuation module to check real value of public entities based on technical and fundamental data.
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