Correlation Between FAM and Neuberger Berman

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Can any of the company-specific risk be diversified away by investing in both FAM 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 FAM and Neuberger Berman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between FAM and Neuberger Berman California, you can compare the effects of market volatilities on FAM 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 FAM with a short position of Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of FAM and Neuberger Berman.

Diversification Opportunities for FAM and Neuberger Berman

-0.08
  Correlation Coefficient

Good diversification

The 3 months correlation between FAM and Neuberger is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding FAM and Neuberger Berman California in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Cal and FAM 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 FAM 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 Cal has no effect on the direction of FAM i.e., FAM and Neuberger Berman go up and down completely randomly.

Pair Corralation between FAM and Neuberger Berman

If you would invest  647.00  in FAM on September 12, 2024 and sell it today you would earn a total of  27.00  from holding FAM or generate 4.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthInsignificant
Accuracy11.11%
ValuesDaily Returns

FAM  vs.  Neuberger Berman California

 Performance 
       Timeline  
FAM 

Risk-Adjusted Performance

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Strong
Strong
Over the last 90 days FAM has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very weak basic indicators, FAM displayed solid returns over the last few months and may actually be approaching a breakup point.
Neuberger Berman Cal 

Risk-Adjusted Performance

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Weak
 
Strong
Very Weak
Over the last 90 days Neuberger Berman California has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly stable fundamental drivers, Neuberger Berman is not utilizing all of its potentials. The recent stock price fuss, may contribute to near-short-term losses for the sophisticated investors.

FAM and Neuberger Berman Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with FAM and Neuberger Berman

The main advantage of trading using opposite FAM and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if FAM 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 FAM and Neuberger Berman California 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.

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