Correlation Between Jacob Small and Needham Small
Can any of the company-specific risk be diversified away by investing in both Jacob 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 Jacob 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 Jacob Small Cap and Needham Small Cap, you can compare the effects of market volatilities on Jacob 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 Jacob Small with a short position of Needham Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jacob Small and Needham Small.
Diversification Opportunities for Jacob Small and Needham Small
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Jacob and Needham is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Jacob 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 Jacob 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 Jacob 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 Jacob Small i.e., Jacob Small and Needham Small go up and down completely randomly.
Pair Corralation between Jacob Small and Needham Small
Assuming the 90 days horizon Jacob Small Cap is expected to generate 1.28 times more return on investment than Needham Small. However, Jacob Small is 1.28 times more volatile than Needham Small Cap. It trades about 0.28 of its potential returns per unit of risk. Needham Small Cap is currently generating about 0.15 per unit of risk. If you would invest 1,813 in Jacob Small Cap on August 25, 2024 and sell it today you would earn a total of 268.00 from holding Jacob Small Cap or generate 14.78% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Jacob Small Cap vs. Needham Small Cap
Performance |
| Timeline |
| Jacob Small Cap |
| Needham Small Cap |
Jacob Small and Needham Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Jacob Small and Needham Small
The main advantage of trading using opposite Jacob Small and Needham Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jacob 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.| Jacob Small vs. Jacob Micro Cap | Jacob Small vs. Jacob Internet Fund | Jacob Small vs. Jacob Forward ETF | Jacob Small vs. Oberweis Small Cap Opportunities |
| 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
Other Complementary Tools
| Transaction History View history of all your transactions and understand their impact on performance | |
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| CEOs Directory Screen CEOs from public companies around the world | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Investing Opportunities Build portfolios using our predefined set of ideas and optimize them against your investing preferences |