Correlation Between Neuberger Berman and Lazard Small

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

By analyzing existing cross correlation between Neuberger Berman Large and Lazard Small Mid Cap, you can compare the effects of market volatilities on Neuberger Berman and Lazard Small 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 Lazard Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Neuberger Berman and Lazard Small.

Diversification Opportunities for Neuberger Berman and Lazard Small

0.86

Correlation Coefficient

Neuberger Berman  Lazard Small

Very poor diversification

The 3 months correlation between Neuberger and Lazard is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Neuberger Berman Large and Lazard Small Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Lazard Small Mid 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 Large are associated (or correlated) with Lazard Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Lazard Small Mid has no effect on the direction of Neuberger Berman i.e., Neuberger Berman and Lazard Small go up and down completely randomly.

Pair Corralation between Neuberger Berman and Lazard Small

Assuming the 90 days horizon Neuberger Berman is expected to generate 3.8 times less return on investment than Lazard Small. But when comparing it to its historical volatility, Neuberger Berman Large is 2.04 times less risky than Lazard Small. It trades about 0.07 of its potential returns per unit of risk. Lazard Small Mid Cap is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  1,278  in Lazard Small Mid Cap on September 12, 2024 and sell it today you would earn a total of  122.00  from holding Lazard Small Mid Cap or generate 9.55% return on investment over 90 days.

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

Neuberger Berman Large  vs.  Lazard Small Mid Cap

Neuberger Berman Large

Risk-Adjusted Performance

5 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Neuberger Berman Large are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Neuberger Berman is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Lazard Small Mid

Risk-Adjusted Performance

10 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Lazard Small Mid Cap are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Lazard Small may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Neuberger Berman and Lazard Small

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

The idea behind Neuberger Berman Large and Lazard Small Mid Cap 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.