Correlation Between Western Asset and Neuberger Berman
Can any of the company-specific risk be diversified away by investing in both Western Asset 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 Western Asset and Neuberger Berman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Western Asset Diversified and Neuberger Berman International, you can compare the effects of market volatilities on Western Asset 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 Western Asset with a short position of Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Western Asset and Neuberger Berman.
Diversification Opportunities for Western Asset and Neuberger Berman
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Western and Neuberger is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Western Asset Diversified and Neuberger Berman International in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Int and Western Asset 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 Western Asset Diversified 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 Int has no effect on the direction of Western Asset i.e., Western Asset and Neuberger Berman go up and down completely randomly.
Pair Corralation between Western Asset and Neuberger Berman
Assuming the 90 days horizon Western Asset Diversified is expected to generate 0.36 times more return on investment than Neuberger Berman. However, Western Asset Diversified is 2.8 times less risky than Neuberger Berman. It trades about -0.03 of its potential returns per unit of risk. Neuberger Berman International is currently generating about -0.1 per unit of risk. If you would invest 1,560 in Western Asset Diversified on September 13, 2024 and sell it today you would lose (6.00) from holding Western Asset Diversified or give up 0.38% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Western Asset Diversified vs. Neuberger Berman International
Performance |
| Timeline |
| Western Asset Diversified |
| Neuberger Berman Int |
Western Asset and Neuberger Berman Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Western Asset and Neuberger Berman
The main advantage of trading using opposite Western Asset and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Western Asset 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.| Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard 500 Index | Western Asset vs. Vanguard Total Stock | Western Asset vs. Vanguard Total Stock |
| Neuberger Berman vs. Neuberger Berman Income | Neuberger Berman vs. Gmo High Yield | Neuberger Berman vs. Prudential High Yield | Neuberger Berman vs. Voya High Yield |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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