Correlation Between Kinetics Small and Needham Aggressive
Can any of the company-specific risk be diversified away by investing in both Kinetics Small 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 Kinetics Small and Needham Aggressive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kinetics Small Cap and Needham Aggressive Growth, you can compare the effects of market volatilities on Kinetics Small 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 Kinetics Small with a short position of Needham Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kinetics Small and Needham Aggressive.
Diversification Opportunities for Kinetics Small and Needham Aggressive
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Kinetics and Needham is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Kinetics Small Cap 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 Kinetics 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 Kinetics Small Cap 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 Kinetics Small i.e., Kinetics Small and Needham Aggressive go up and down completely randomly.
Pair Corralation between Kinetics Small and Needham Aggressive
Assuming the 90 days horizon Kinetics Small Cap is expected to under-perform the Needham Aggressive. In addition to that, Kinetics Small is 2.52 times more volatile than Needham Aggressive Growth. It trades about -0.08 of its total potential returns per unit of risk. Needham Aggressive Growth is currently generating about 0.13 per unit of volatility. 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 Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kinetics Small Cap vs. Needham Aggressive Growth
Performance |
| Timeline |
| Kinetics Small Cap |
| Needham Aggressive Growth |
Kinetics Small and Needham Aggressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kinetics Small and Needham Aggressive
The main advantage of trading using opposite Kinetics Small and Needham Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kinetics Small 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.| Kinetics Small vs. Energy Basic Materials | Kinetics Small vs. Goehring Rozencwajg Resources | Kinetics Small vs. World Energy Fund | Kinetics Small vs. Fidelity Advisor Energy |
| Needham Aggressive vs. Needham Small Cap | Needham Aggressive vs. Needham Growth Fund | Needham Aggressive vs. Needham Aggressive Growth | Needham Aggressive vs. Oberweis Micro Cap Fund |
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 Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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