Correlation Between Neuberger Berman and Madison Small

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

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

Diversification Opportunities for Neuberger Berman and Madison Small

0.21

Correlation Coefficient

Neuberger Berman  Madison Small

Modest diversification

The 3 months correlation between Neuberger and Madison is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Neuberger Berman High and Madison Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Madison Small Cap 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 High are associated (or correlated) with Madison Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Madison Small Cap has no effect on the direction of Neuberger Berman i.e., Neuberger Berman and Madison Small go up and down completely randomly.

Pair Corralation between Neuberger Berman and Madison Small

Considering the 90-day investment horizon Neuberger Berman is expected to generate 4.63 times less return on investment than Madison Small. But when comparing it to its historical volatility, Neuberger Berman High is 1.64 times less risky than Madison Small. It trades about 0.05 of its potential returns per unit of risk. Madison Small Cap is currently generating about 0.14 of returns per unit of risk over similar time horizon. If you would invest  1,003  in Madison Small Cap on April 25, 2025 and sell it today you would earn a total of  96.00  from holding Madison Small Cap or generate 9.57% return on investment over 90 days.

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

Neuberger Berman High  vs.  Madison Small Cap

Neuberger Berman High

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Neuberger Berman High are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of comparatively stable technical indicators, Neuberger Berman is not utilizing all of its potentials. The recent stock price uproar, may contribute to short-horizon losses for the private investors.

Madison Small Cap

Risk-Adjusted Performance

Good

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

Pair Trading with Neuberger Berman and Madison Small

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

The idea behind Neuberger Berman High and Madison Small 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.