Correlation Between Emerald Growth and Needham Aggressive

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

Diversification Opportunities for Emerald Growth and Needham Aggressive

0.8
  Correlation Coefficient

Very poor diversification

The 3 months correlation between Emerald and Needham is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Emerald Growth Fund 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 Emerald Growth 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 Emerald Growth Fund 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 Emerald Growth i.e., Emerald Growth and Needham Aggressive go up and down completely randomly.

Pair Corralation between Emerald Growth and Needham Aggressive

Assuming the 90 days horizon Emerald Growth Fund is expected to under-perform the Needham Aggressive. But the mutual fund apears to be less risky and, when comparing its historical volatility, Emerald Growth Fund is 1.04 times less risky than Needham Aggressive. The mutual fund trades about -0.01 of its potential returns per unit of risk. The Needham Aggressive Growth is currently generating about 0.13 of returns per unit of risk over similar time horizon. If you would invest  4,677  in Needham Aggressive Growth on September 13, 2024 and sell it today you would earn a total of  168.00  from holding Needham Aggressive Growth or generate 3.59% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthStrong
Accuracy100.0%
ValuesDaily Returns

Emerald Growth Fund  vs.  Needham Aggressive Growth

 Performance 
       Timeline  
Emerald Growth 

Risk-Adjusted Performance

10 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Emerald Growth Fund are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Emerald Growth may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Needham Aggressive Growth 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Needham Aggressive Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Needham Aggressive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Emerald Growth and Needham Aggressive Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Emerald Growth and Needham Aggressive

The main advantage of trading using opposite Emerald Growth and Needham Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Emerald Growth 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.
The idea behind Emerald Growth Fund and Needham Aggressive Growth 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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.

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