Correlation Between Neuberger Berman and First Trust
Can any of the company-specific risk be diversified away by investing in both Neuberger Berman and First Trust 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 Neuberger Berman and First Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neuberger Berman ETF and First Trust TCW, you can compare the effects of market volatilities on Neuberger Berman and First Trust 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 Neuberger Berman with a short position of First Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neuberger Berman and First Trust.
Diversification Opportunities for Neuberger Berman and First Trust
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Neuberger and First is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Neuberger Berman ETF and First Trust TCW in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First Trust TCW and Neuberger Berman 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 Neuberger Berman ETF are associated (or correlated) with First Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First Trust TCW has no effect on the direction of Neuberger Berman i.e., Neuberger Berman and First Trust go up and down completely randomly.
Pair Corralation between Neuberger Berman and First Trust
Given the investment horizon of 90 days Neuberger Berman ETF is expected to generate 0.35 times more return on investment than First Trust. However, Neuberger Berman ETF is 2.87 times less risky than First Trust. It trades about 0.22 of its potential returns per unit of risk. First Trust TCW is currently generating about 0.04 per unit of risk. If you would invest 5,080 in Neuberger Berman ETF on August 26, 2024 and sell it today you would earn a total of 41.00 from holding Neuberger Berman ETF or generate 0.81% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neuberger Berman ETF vs. First Trust TCW
Performance |
| Timeline |
| Neuberger Berman ETF |
| First Trust TCW |
Neuberger Berman and First Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neuberger Berman and First Trust
The main advantage of trading using opposite Neuberger Berman and First Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neuberger Berman position performs unexpectedly, First Trust 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 First Trust will offset losses from the drop in First Trust's long position.The idea behind Neuberger Berman ETF and First Trust TCW 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.
| First Trust vs. First Trust TCW | First Trust vs. SPDR Bloomberg Barclays | First Trust vs. First Trust Short | First Trust vs. First Trust Emerging |
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 Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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