Correlation Between Neuberger Berman and Westwood Largecap

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

By analyzing existing cross correlation between Neuberger Berman Genesis and Westwood Largecap Value, you can compare the effects of market volatilities on Neuberger Berman and Westwood Largecap 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 Westwood Largecap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neuberger Berman and Westwood Largecap.

Diversification Opportunities for Neuberger Berman and Westwood Largecap

0.95

Correlation Coefficient

Neuberger Berman  Westwood Largecap

Almost no diversification

The 3 months correlation between Neuberger and Westwood is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Neuberger Berman Genesis and Westwood Largecap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Largecap Value 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 Genesis are associated (or correlated) with Westwood Largecap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Largecap Value has no effect on the direction of Neuberger Berman i.e., Neuberger Berman and Westwood Largecap go up and down completely randomly.

Pair Corralation between Neuberger Berman and Westwood Largecap

Assuming the 90 days horizon Neuberger Berman Genesis is expected to generate 1.59 times more return on investment than Westwood Largecap. However, Neuberger Berman is 1.59 times more volatile than Westwood Largecap Value. It trades about 0.17 of its potential returns per unit of risk. Westwood Largecap Value is currently generating about 0.13 per unit of risk. If you would invest  6,575  in Neuberger Berman Genesis on September 2, 2024 and sell it today you would earn a total of  799.00  from holding Neuberger Berman Genesis or generate 12.15% 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 Genesis  vs.  Westwood Largecap Value

Neuberger Berman Genesis

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Neuberger Berman Genesis are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Neuberger Berman may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Westwood Largecap Value

Risk-Adjusted Performance

10 of 100

OK

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

Pair Trading with Neuberger Berman and Westwood Largecap

The main advantage of trading using opposite Neuberger Berman and Westwood Largecap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Neuberger Berman position performs unexpectedly, Westwood Largecap 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 Westwood Largecap will offset losses from the drop in Westwood Largecap's long position.

The idea behind Neuberger Berman Genesis and Westwood Largecap Value 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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.