Correlation Between American Beacon and Neuberger Berman
Can any of the company-specific risk be diversified away by investing in both American Beacon 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 American Beacon and Neuberger Berman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Beacon Stephens and Neuberger Berman Small, you can compare the effects of market volatilities on American Beacon 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 American Beacon with a short position of Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Beacon and Neuberger Berman.
Diversification Opportunities for American Beacon and Neuberger Berman
0.99 | Correlation Coefficient |
No risk reduction
The 3 months correlation between American and Neuberger is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding American Beacon Stephens and Neuberger Berman Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Small and American Beacon 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 American Beacon Stephens 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 Small has no effect on the direction of American Beacon i.e., American Beacon and Neuberger Berman go up and down completely randomly.
Pair Corralation between American Beacon and Neuberger Berman
Assuming the 90 days horizon American Beacon Stephens is expected to generate 0.91 times more return on investment than Neuberger Berman. However, American Beacon Stephens is 1.09 times less risky than Neuberger Berman. It trades about 0.23 of its potential returns per unit of risk. Neuberger Berman Small is currently generating about 0.19 per unit of risk. If you would invest 1,566 in American Beacon Stephens on August 29, 2024 and sell it today you would earn a total of 124.00 from holding American Beacon Stephens or generate 7.92% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Beacon Stephens vs. Neuberger Berman Small
Performance |
| Timeline |
| American Beacon Stephens |
| Neuberger Berman Small |
American Beacon and Neuberger Berman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Beacon and Neuberger Berman
The main advantage of trading using opposite American Beacon and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Beacon 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.| American Beacon vs. Tiaa Cref Real Estate | American Beacon vs. American Century Global | American Beacon vs. Msif Real Estate | American Beacon vs. Versus Capital Multi Manager |
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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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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