Correlation Between Microsoft and Neuberger Berman
Can any of the company-specific risk be diversified away by investing in both Microsoft 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 Microsoft and Neuberger Berman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Microsoft and Neuberger Berman Long, you can compare the effects of market volatilities on Microsoft 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 Microsoft with a short position of Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and Neuberger Berman.
Diversification Opportunities for Microsoft and Neuberger Berman
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Microsoft and Neuberger is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and Neuberger Berman Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Long and Microsoft 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 Microsoft 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 Long has no effect on the direction of Microsoft i.e., Microsoft and Neuberger Berman go up and down completely randomly.
Pair Corralation between Microsoft and Neuberger Berman
Given the investment horizon of 90 days Microsoft is expected to generate 2.08 times less return on investment than Neuberger Berman. In addition to that, Microsoft is 6.14 times more volatile than Neuberger Berman Long. It trades about 0.02 of its total potential returns per unit of risk. Neuberger Berman Long is currently generating about 0.28 per unit of volatility. If you would invest 1,845 in Neuberger Berman Long on August 28, 2024 and sell it today you would earn a total of 33.00 from holding Neuberger Berman Long or generate 1.79% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Microsoft vs. Neuberger Berman Long
Performance |
| Timeline |
| Microsoft |
| Neuberger Berman Long |
Microsoft and Neuberger Berman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Microsoft and Neuberger Berman
The main advantage of trading using opposite Microsoft and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft 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.| Microsoft vs. GigaCloud Technology Class | Microsoft vs. Arqit Quantum | Microsoft vs. Cemtrex | Microsoft vs. Paysafe |
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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 Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.
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