Correlation Between Federated Hermes and Neuberger Berman

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Can any of the company-specific risk be diversified away by investing in both Federated Hermes 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 Federated Hermes and Neuberger Berman into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Federated Hermes Mdt and Neuberger Berman Long, you can compare the effects of market volatilities on Federated Hermes 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 Federated Hermes with a short position of Neuberger Berman. Check out your portfolio center. Please also check ongoing floating volatility patterns of Federated Hermes and Neuberger Berman.

Diversification Opportunities for Federated Hermes and Neuberger Berman

-0.83
  Correlation Coefficient

Pay attention - limited upside

The 3 months correlation between Federated and Neuberger is -0.83. Overlapping area represents the amount of risk that can be diversified away by holding Federated Hermes Mdt and Neuberger Berman Long in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Neuberger Berman Long and Federated Hermes 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 Federated Hermes Mdt 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 Long has no effect on the direction of Federated Hermes i.e., Federated Hermes and Neuberger Berman go up and down completely randomly.

Pair Corralation between Federated Hermes and Neuberger Berman

Assuming the 90 days horizon Federated Hermes Mdt is expected to generate 0.41 times more return on investment than Neuberger Berman. However, Federated Hermes Mdt is 2.46 times less risky than Neuberger Berman. It trades about -0.14 of its potential returns per unit of risk. Neuberger Berman Long is currently generating about -0.14 per unit of risk. If you would invest  1,859  in Federated Hermes Mdt on April 7, 2022 and sell it today you would lose (16.00)  from holding Federated Hermes Mdt or give up 0.86% of portfolio value over 90 days.
Time Period3 Months [change]
DirectionMoves Against 
StrengthSignificant
Accuracy95.24%
ValuesDaily Returns

Federated Hermes Mdt  vs.  Neuberger Berman Long

 Performance (%) 
      Timeline 
Federated Hermes Mdt 
Federated Performance
14 of 100
Compared to the overall equity markets, risk-adjusted returns on investments in Federated Hermes Mdt are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Federated Hermes is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Federated Price Channel

Neuberger Berman Long 
Neuberger Performance
0 of 100
Over the last 90 days Neuberger Berman Long has generated negative risk-adjusted returns adding no value to fund investors. 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.

Neuberger Price Channel

Federated Hermes and Neuberger Berman Volatility Contrast

 Predicted Return Density 
      Returns 

Pair Trading with Federated Hermes and Neuberger Berman

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

Federated Hermes Mdt

Pair trading matchups for Federated Hermes

The idea behind Federated Hermes Mdt and Neuberger Berman Long 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.

Neuberger Berman Long

Pair trading matchups for Neuberger Berman

Check out your portfolio center. 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.

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