Correlation Between Columbia Moderate and Neuberger Berman

Can any of the company-specific risk be diversified away by investing in both Columbia Moderate 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 Columbia Moderate and Neuberger Berman into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Columbia Moderate Growth and Neuberger Berman Socially, you can compare the effects of market volatilities on Columbia Moderate 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 Columbia Moderate with a short position of Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Moderate and Neuberger Berman.

Diversification Opportunities for Columbia Moderate and Neuberger Berman

0.91

Correlation Coefficient

Columbia Moderate  Neuberger Berman

Almost no diversification

The 3 months correlation between Columbia and Neuberger is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Moderate Growth and Neuberger Berman Socially in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Socially and Columbia Moderate 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 Columbia Moderate Growth 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 Socially has no effect on the direction of Columbia Moderate i.e., Columbia Moderate and Neuberger Berman go up and down completely randomly.

Pair Corralation between Columbia Moderate and Neuberger Berman

Assuming the 90 days horizon Columbia Moderate is expected to generate 1.79 times less return on investment than Neuberger Berman. But when comparing it to its historical volatility, Columbia Moderate Growth is 1.77 times less risky than Neuberger Berman. It trades about 0.1 of its potential returns per unit of risk. Neuberger Berman Socially is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest  3,131  in Neuberger Berman Socially on September 12, 2024 and sell it today you would earn a total of  2,005  from holding Neuberger Berman Socially or generate 64.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

Columbia Moderate Growth  vs.  Neuberger Berman Socially

Columbia Moderate Growth

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Columbia Moderate Growth are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Columbia Moderate is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Neuberger Berman Socially

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neuberger Berman Socially are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Neuberger Berman may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Columbia Moderate and Neuberger Berman

The main advantage of trading using opposite Columbia Moderate and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Moderate 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.

The idea behind Columbia Moderate Growth and Neuberger Berman Socially 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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.