Correlation Between Hennessy Small and Neuberger Berman
Can any of the company-specific risk be diversified away by investing in both Hennessy Small 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 Hennessy Small and Neuberger Berman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hennessy Small Cap and Neuberger Berman Mid, you can compare the effects of market volatilities on Hennessy Small 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 Hennessy Small with a short position of Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hennessy Small and Neuberger Berman.
Diversification Opportunities for Hennessy Small and Neuberger Berman
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Hennessy and Neuberger is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Hennessy Small Cap 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 Hennessy Small 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 Hennessy Small Cap 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 Hennessy Small i.e., Hennessy Small and Neuberger Berman go up and down completely randomly.
Pair Corralation between Hennessy Small and Neuberger Berman
Assuming the 90 days horizon Hennessy Small Cap is expected to under-perform the Neuberger Berman. But the mutual fund apears to be less risky and, when comparing its historical volatility, Hennessy Small Cap is 1.2 times less risky than Neuberger Berman. The mutual fund trades about -0.13 of its potential returns per unit of risk. The Neuberger Berman Mid is currently generating about -0.1 of returns per unit of risk over similar time horizon. If you would invest 2,008 in Neuberger Berman Mid on November 3, 2024 and sell it today you would lose (176.00) from holding Neuberger Berman Mid or give up 8.76% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 97.56% |
| Values | Daily Returns |
Hennessy Small Cap vs. Neuberger Berman Mid
Performance |
| Timeline |
| Hennessy Small Cap |
| Neuberger Berman Mid |
Hennessy Small and Neuberger Berman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hennessy Small and Neuberger Berman
The main advantage of trading using opposite Hennessy Small and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hennessy Small 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.| Hennessy Small vs. Dreyfusstandish Global Fixed | Hennessy Small vs. Angel Oak Financial | Hennessy Small vs. Goldman Sachs Short | Hennessy Small vs. Ab Global Bond |
| 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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