Correlation Between Neuberger Berman and Baron Partners

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Can any of the company-specific risk be diversified away by investing in both Neuberger Berman and Baron Partners 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 Baron Partners into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neuberger Berman Large and Baron Partners Fund, you can compare the effects of market volatilities on Neuberger Berman and Baron Partners 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 Baron Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neuberger Berman and Baron Partners.

Diversification Opportunities for Neuberger Berman and Baron Partners

0.57
  Correlation Coefficient

Very weak diversification

The 3 months correlation between Neuberger and Baron is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Neuberger Berman Large and Baron Partners Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron Partners 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 Large are associated (or correlated) with Baron Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron Partners has no effect on the direction of Neuberger Berman i.e., Neuberger Berman and Baron Partners go up and down completely randomly.

Pair Corralation between Neuberger Berman and Baron Partners

Assuming the 90 days horizon Neuberger Berman is expected to generate 4.43 times less return on investment than Baron Partners. But when comparing it to its historical volatility, Neuberger Berman Large is 2.6 times less risky than Baron Partners. It trades about 0.05 of its potential returns per unit of risk. Baron Partners Fund is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  11,604  in Baron Partners Fund on September 12, 2024 and sell it today you would earn a total of  9,448  from holding Baron Partners Fund or generate 81.42% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthWeak
Accuracy100.0%
ValuesDaily Returns

Neuberger Berman Large  vs.  Baron Partners Fund

 Performance 
       Timeline  
Neuberger Berman Large 

Risk-Adjusted Performance

5 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Neuberger Berman Large are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Neuberger Berman is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.
Baron Partners 

Risk-Adjusted Performance

16 of 100

 
Weak
 
Strong
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Baron Partners Fund are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Baron Partners showed solid returns over the last few months and may actually be approaching a breakup point.

Neuberger Berman and Baron Partners Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Neuberger Berman and Baron Partners

The main advantage of trading using opposite Neuberger Berman and Baron Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neuberger Berman position performs unexpectedly, Baron Partners 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 Baron Partners will offset losses from the drop in Baron Partners' long position.
The idea behind Neuberger Berman Large and Baron Partners Fund 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.
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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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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