Correlation Between Hunter Small and Needham Small
Can any of the company-specific risk be diversified away by investing in both Hunter Small and Needham 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 Hunter Small and Needham Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Hunter Small Cap and Needham Small Cap, you can compare the effects of market volatilities on Hunter Small and Needham 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 Hunter Small with a short position of Needham Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Hunter Small and Needham Small.
Diversification Opportunities for Hunter Small and Needham Small
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Hunter and Needham is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Hunter Small Cap and Needham Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Small Cap and Hunter Small 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 Hunter Small Cap are associated (or correlated) with Needham Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Small Cap has no effect on the direction of Hunter Small i.e., Hunter Small and Needham Small go up and down completely randomly.
Pair Corralation between Hunter Small and Needham Small
Assuming the 90 days horizon Hunter Small Cap is expected to generate 0.47 times more return on investment than Needham Small. However, Hunter Small Cap is 2.13 times less risky than Needham Small. It trades about 0.17 of its potential returns per unit of risk. Needham Small Cap is currently generating about 0.05 per unit of risk. If you would invest 1,238 in Hunter Small Cap on November 3, 2024 and sell it today you would earn a total of 36.00 from holding Hunter Small Cap or generate 2.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Hunter Small Cap vs. Needham Small Cap
Performance |
| Timeline |
| Hunter Small Cap |
| Needham Small Cap |
Hunter Small and Needham Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Hunter Small and Needham Small
The main advantage of trading using opposite Hunter Small and Needham Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Hunter Small position performs unexpectedly, Needham 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 Needham Small will offset losses from the drop in Needham Small's long position.| Hunter Small vs. James Alpha Structured | Hunter Small vs. Calamos Antetokounmpo Sustainable | Hunter Small vs. Ultra Short Fixed Income | Hunter Small vs. Vanguard Wellington Fund |
| Needham Small vs. Needham Aggressive Growth | Needham Small vs. Needham Growth Fund | Needham Small vs. Baron Opportunity Fund | Needham Small vs. Jacob Micro Cap |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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