Correlation Between Small Pany and Needham Aggressive
Can any of the company-specific risk be diversified away by investing in both Small Pany 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 Small Pany and Needham Aggressive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Pany Growth and Needham Aggressive Growth, you can compare the effects of market volatilities on Small Pany 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 Small Pany with a short position of Needham Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Pany and Needham Aggressive.
Diversification Opportunities for Small Pany and Needham Aggressive
0.78 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Small and Needham is 0.78. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany Growth 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 Small Pany 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 Small Pany Growth 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 Small Pany i.e., Small Pany and Needham Aggressive go up and down completely randomly.
Pair Corralation between Small Pany and Needham Aggressive
Assuming the 90 days horizon Small Pany Growth is expected to generate 1.4 times more return on investment than Needham Aggressive. However, Small Pany is 1.4 times more volatile than Needham Aggressive Growth. It trades about 0.33 of its potential returns per unit of risk. Needham Aggressive Growth is currently generating about 0.13 per unit of risk. If you would invest 1,482 in Small Pany Growth on September 13, 2024 and sell it today you would earn a total of 196.00 from holding Small Pany Growth or generate 13.23% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Pany Growth vs. Needham Aggressive Growth
Performance |
| Timeline |
| Small Pany Growth |
| Needham Aggressive Growth |
Small Pany and Needham Aggressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Pany and Needham Aggressive
The main advantage of trading using opposite Small Pany and Needham Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Pany 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.| Small Pany vs. Mid Cap Growth | Small Pany vs. Growth Portfolio Class | Small Pany vs. Morgan Stanley Multi | Small Pany vs. Emerging Markets Portfolio |
| 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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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