Correlation Between Health Care and Neuberger Berman
Can any of the company-specific risk be diversified away by investing in both Health Care 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 Health Care and Neuberger Berman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Health Care Ultrasector and Neuberger Berman Mid, you can compare the effects of market volatilities on Health Care 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 Health Care with a short position of Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Health Care and Neuberger Berman.
Diversification Opportunities for Health Care and Neuberger Berman
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Health and Neuberger is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Health Care Ultrasector and Neuberger Berman Mid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Mid and Health Care 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 Health Care Ultrasector 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 Mid has no effect on the direction of Health Care i.e., Health Care and Neuberger Berman go up and down completely randomly.
Pair Corralation between Health Care and Neuberger Berman
Assuming the 90 days horizon Health Care is expected to generate 1.57 times less return on investment than Neuberger Berman. But when comparing it to its historical volatility, Health Care Ultrasector is 1.15 times less risky than Neuberger Berman. It trades about 0.14 of its potential returns per unit of risk. Neuberger Berman Mid is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,784 in Neuberger Berman Mid on October 25, 2024 and sell it today you would earn a total of 76.00 from holding Neuberger Berman Mid or generate 4.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Health Care Ultrasector vs. Neuberger Berman Mid
Performance |
| Timeline |
| Health Care Ultrasector |
| Neuberger Berman Mid |
Health Care and Neuberger Berman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Health Care and Neuberger Berman
The main advantage of trading using opposite Health Care and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Health Care 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.| Health Care vs. Qs Global Equity | Health Care vs. Dws Equity Sector | Health Care vs. Enhanced Fixed Income | Health Care vs. Gmo Global Equity |
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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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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