Correlation Between GM and Neuberger Berman
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Neuberger Berman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Neuberger Berman Absolute, you can compare the effects of market volatilities on GM 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 GM with a short position of Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Neuberger Berman.
Diversification Opportunities for GM and Neuberger Berman
0.29 | Correlation Coefficient |
Modest diversification
The 3 months correlation between GM and Neuberger is 0.29. Overlapping area represents the amount of risk that can be diversified away by holding General Motors and Neuberger Berman Absolute in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Absolute and GM 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 General Motors 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 Absolute has no effect on the direction of GM i.e., GM and Neuberger Berman go up and down completely randomly.
Pair Corralation between GM and Neuberger Berman
Allowing for the 90-day total investment horizon General Motors is expected to generate 8.91 times more return on investment than Neuberger Berman. However, GM is 8.91 times more volatile than Neuberger Berman Absolute. It trades about 0.08 of its potential returns per unit of risk. Neuberger Berman Absolute is currently generating about 0.05 per unit of risk. If you would invest 4,483 in General Motors on September 3, 2024 and sell it today you would earn a total of 1,076 from holding General Motors or generate 24.0% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
General Motors vs. Neuberger Berman Absolute
Performance |
| Timeline |
| General Motors |
| Neuberger Berman Absolute |
GM and Neuberger Berman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with GM and Neuberger Berman
The main advantage of trading using opposite GM and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors and Neuberger Berman Absolute 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. Global Gold Fund | Neuberger Berman vs. First Eagle Gold | Neuberger Berman vs. Short Precious Metals | Neuberger Berman vs. Oppenheimer Gold Special |
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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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