Correlation Between Ford and Neuberger Berman
Can any of the company-specific risk be diversified away by investing in both Ford 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 Ford and Neuberger Berman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ford Motor and Neuberger Berman Small, you can compare the effects of market volatilities on Ford 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 Ford with a short position of Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ford and Neuberger Berman.
Diversification Opportunities for Ford and Neuberger Berman
-0.07 | Correlation Coefficient |
Good diversification
The 3 months correlation between Ford and Neuberger is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Ford Motor and Neuberger Berman Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Small and Ford 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 Ford Motor 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 Small has no effect on the direction of Ford i.e., Ford and Neuberger Berman go up and down completely randomly.
Pair Corralation between Ford and Neuberger Berman
Taking into account the 90-day investment horizon Ford Motor is expected to generate 1.39 times more return on investment than Neuberger Berman. However, Ford is 1.39 times more volatile than Neuberger Berman Small. It trades about 0.01 of its potential returns per unit of risk. Neuberger Berman Small is currently generating about -0.09 per unit of risk. If you would invest 957.00 in Ford Motor on November 30, 2024 and sell it today you would lose (2.00) from holding Ford Motor or give up 0.21% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Ford Motor vs. Neuberger Berman Small
Performance |
| Timeline |
| Ford Motor |
| Neuberger Berman Small |
Ford and Neuberger Berman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ford and Neuberger Berman
The main advantage of trading using opposite Ford and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ford 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 Ford Motor and Neuberger Berman Small 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.| Neuberger Berman vs. Neuberger Berman Floating | Neuberger Berman vs. Neuberger Berman Floating | Neuberger Berman vs. Neuberger Berman Floating | Neuberger Berman vs. Neuberger Berman Guardian |
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 Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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