Correlation Between Neuberger Berman and Legg Mason
Can any of the company-specific risk be diversified away by investing in both Neuberger Berman and Legg Mason 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 Legg Mason into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Neuberger Berman Small and Legg Mason Bw, you can compare the effects of market volatilities on Neuberger Berman and Legg Mason 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 Legg Mason. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neuberger Berman and Legg Mason.
Diversification Opportunities for Neuberger Berman and Legg Mason
0.95 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Neuberger and Legg is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Neuberger Berman Small and Legg Mason Bw in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Legg Mason Bw 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 Small are associated (or correlated) with Legg Mason. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Legg Mason Bw has no effect on the direction of Neuberger Berman i.e., Neuberger Berman and Legg Mason go up and down completely randomly.
Pair Corralation between Neuberger Berman and Legg Mason
Assuming the 90 days horizon Neuberger Berman Small is expected to generate 1.62 times more return on investment than Legg Mason. However, Neuberger Berman is 1.62 times more volatile than Legg Mason Bw. It trades about 0.25 of its potential returns per unit of risk. Legg Mason Bw is currently generating about 0.34 per unit of risk. If you would invest 4,904 in Neuberger Berman Small on September 3, 2024 and sell it today you would earn a total of 411.00 from holding Neuberger Berman Small or generate 8.38% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Neuberger Berman Small vs. Legg Mason Bw
Performance |
| Timeline |
| Neuberger Berman Small |
| Legg Mason Bw |
Neuberger Berman and Legg Mason Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Neuberger Berman and Legg Mason
The main advantage of trading using opposite Neuberger Berman and Legg Mason positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neuberger Berman position performs unexpectedly, Legg Mason 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 Legg Mason will offset losses from the drop in Legg Mason's long position.| Neuberger Berman vs. The Gabelli Small | Neuberger Berman vs. Delaware Limited Term Diversified | Neuberger Berman vs. Sentinel Small Pany | Neuberger Berman vs. Adams Diversified Equity |
| Legg Mason vs. Dodge Cox Stock | Legg Mason vs. American Funds American | Legg Mason vs. American Funds American | Legg Mason vs. American Mutual Fund |
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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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