Correlation Between Aam Select and Needham Aggressive
Can any of the company-specific risk be diversified away by investing in both Aam Select and Needham Aggressive 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 Aam Select and Needham Aggressive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Aam Select Income and Needham Aggressive Growth, you can compare the effects of market volatilities on Aam Select and Needham Aggressive 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 Aam Select with a short position of Needham Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aam Select and Needham Aggressive.
Diversification Opportunities for Aam Select and Needham Aggressive
-0.23 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Aam and Needham is -0.23. Overlapping area represents the amount of risk that can be diversified away by holding Aam Select Income and Needham Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Aggressive Growth and Aam Select 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 Aam Select Income are associated (or correlated) with Needham Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Aggressive Growth has no effect on the direction of Aam Select i.e., Aam Select and Needham Aggressive go up and down completely randomly.
Pair Corralation between Aam Select and Needham Aggressive
Assuming the 90 days horizon Aam Select Income is expected to under-perform the Needham Aggressive. But the mutual fund apears to be less risky and, when comparing its historical volatility, Aam Select Income is 4.17 times less risky than Needham Aggressive. The mutual fund trades about -0.02 of its potential returns per unit of risk. The Needham Aggressive Growth is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 4,695 in Needham Aggressive Growth on September 3, 2024 and sell it today you would earn a total of 399.00 from holding Needham Aggressive Growth or generate 8.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Aam Select Income vs. Needham Aggressive Growth
Performance |
| Timeline |
| Aam Select Income |
| Needham Aggressive Growth |
Aam Select and Needham Aggressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Aam Select and Needham Aggressive
The main advantage of trading using opposite Aam Select and Needham Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aam Select position performs unexpectedly, Needham Aggressive 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 Needham Aggressive will offset losses from the drop in Needham Aggressive's long position.| Aam Select vs. Needham Aggressive Growth | Aam Select vs. Western Asset High | Aam Select vs. Gmo High Yield | Aam Select vs. Nuveen High Income |
| Needham Aggressive vs. Needham Aggressive Growth | Needham Aggressive vs. Needham Small Cap | Needham Aggressive vs. Ultramid Cap Profund Ultramid Cap | Needham Aggressive vs. Fidelity Advisor Semiconductors |
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 the Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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