Correlation Between Payden Government and Neuberger Berman

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

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

Diversification Opportunities for Payden Government and Neuberger Berman

-0.59

Correlation Coefficient

Payden Government  Neuberger Berman

Excellent diversification

The 3 months correlation between Payden and Neuberger is -0.59. Overlapping area represents the amount of risk that can be diversified away by holding Payden Government Fund 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 Payden Government 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 Payden Government Fund 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 Payden Government i.e., Payden Government and Neuberger Berman go up and down completely randomly.

Pair Corralation between Payden Government and Neuberger Berman

Assuming the 90 days horizon Payden Government Fund is expected to under-perform the Neuberger Berman. But the mutual fund apears to be less risky and, when comparing its historical volatility, Payden Government Fund is 4.94 times less risky than Neuberger Berman. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Neuberger Berman Socially is currently generating about 0.18 of returns per unit of risk over similar time horizon. If you would invest  4,584  in Neuberger Berman Socially on September 12, 2024 and sell it today you would earn a total of  381.00  from holding Neuberger Berman Socially or generate 8.31% return on investment over 90 days.

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

Payden Government Fund  vs.  Neuberger Berman Socially

Payden Government

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Payden Government Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Payden Government 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 fundamental indicators, Neuberger Berman may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Payden Government and Neuberger Berman

The main advantage of trading using opposite Payden Government and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Government 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 Payden Government Fund 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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.