Correlation Between Neuberger Berman and Gotham Defensive
Can any of the company-specific risk be diversified away by investing in both Neuberger Berman and Gotham Defensive 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 Gotham Defensive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neuberger Berman Long and Gotham Defensive Long, you can compare the effects of market volatilities on Neuberger Berman and Gotham Defensive 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 Gotham Defensive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neuberger Berman and Gotham Defensive.
Diversification Opportunities for Neuberger Berman and Gotham Defensive
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between NEUBERGER and Gotham is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Neuberger Berman Long and Gotham Defensive Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gotham Defensive Long 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 Long are associated (or correlated) with Gotham Defensive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gotham Defensive Long has no effect on the direction of Neuberger Berman i.e., Neuberger Berman and Gotham Defensive go up and down completely randomly.
Pair Corralation between Neuberger Berman and Gotham Defensive
Assuming the 90 days horizon Neuberger Berman is expected to generate 4.66 times less return on investment than Gotham Defensive. But when comparing it to its historical volatility, Neuberger Berman Long is 2.23 times less risky than Gotham Defensive. It trades about 0.17 of its potential returns per unit of risk. Gotham Defensive Long is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 1,785 in Gotham Defensive Long on November 28, 2024 and sell it today you would earn a total of 160.00 from holding Gotham Defensive Long or generate 8.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neuberger Berman Long vs. Gotham Defensive Long
Performance |
| Timeline |
| Neuberger Berman Long |
| Gotham Defensive Long |
Neuberger Berman and Gotham Defensive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neuberger Berman and Gotham Defensive
The main advantage of trading using opposite Neuberger Berman and Gotham Defensive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neuberger Berman position performs unexpectedly, Gotham Defensive 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 Gotham Defensive will offset losses from the drop in Gotham Defensive's long position.The idea behind Neuberger Berman Long and Gotham Defensive Long 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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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 Aroon Oscillator module to analyze current equity momentum using Aroon Oscillator and other momentum ratios.
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