Correlation Between Aave and Neuberger Berman

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

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

Diversification Opportunities for Aave and Neuberger Berman

0.32

Correlation Coefficient

Aave  Neuberger Berman

Weak diversification

The 3 months correlation between Aave and Neuberger is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Aave and Neuberger Berman E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman E and Aave 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 Aave 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 E has no effect on the direction of Aave i.e., Aave and Neuberger Berman go up and down completely randomly.

Pair Corralation between Aave and Neuberger Berman

Assuming the 90 days trading horizon Aave is expected to under-perform the Neuberger Berman. In addition to that, Aave is 14.81 times more volatile than Neuberger Berman E. It trades about -0.23 of its total potential returns per unit of risk. Neuberger Berman E is currently generating about -0.2 per unit of volatility. If you would invest  876.00  in Neuberger Berman E on January 20, 2024 and sell it today you would lose (16.00) from holding Neuberger Berman E or give up 1.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.65%
Values	Daily Returns

Aave  vs.  Neuberger Berman E

Aave

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aave are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Aave is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Neuberger Berman E

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Neuberger Berman E has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Neuberger Berman is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Aave and Neuberger Berman

The main advantage of trading using opposite Aave and Neuberger Berman positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aave 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 Aave and Neuberger Berman E 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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.