Correlation Between Needham Aggressive and Kinetics Small
Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and Kinetics 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 Needham Aggressive and Kinetics Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Needham Aggressive Growth and Kinetics Small Cap, you can compare the effects of market volatilities on Needham Aggressive and Kinetics 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 Needham Aggressive with a short position of Kinetics Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Kinetics Small.
Diversification Opportunities for Needham Aggressive and Kinetics Small
0.44 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Needham and Kinetics is 0.44. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Kinetics Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kinetics Small Cap and Needham Aggressive 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 Needham Aggressive Growth are associated (or correlated) with Kinetics Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kinetics Small Cap has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Kinetics Small go up and down completely randomly.
Pair Corralation between Needham Aggressive and Kinetics Small
Assuming the 90 days horizon Needham Aggressive is expected to generate 6.41 times less return on investment than Kinetics Small. But when comparing it to its historical volatility, Needham Aggressive Growth is 1.31 times less risky than Kinetics Small. It trades about 0.12 of its potential returns per unit of risk. Kinetics Small Cap is currently generating about 0.59 of returns per unit of risk over similar time horizon. If you would invest 17,416 in Kinetics Small Cap on August 26, 2024 and sell it today you would earn a total of 5,965 from holding Kinetics Small Cap or generate 34.25% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Aggressive Growth vs. Kinetics Small Cap
Performance |
| Timeline |
| Needham Aggressive Growth |
| Kinetics Small Cap |
Needham Aggressive and Kinetics Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Aggressive and Kinetics Small
The main advantage of trading using opposite Needham Aggressive and Kinetics Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive position performs unexpectedly, Kinetics 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 Kinetics Small will offset losses from the drop in Kinetics Small's long position.| 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 |
| Kinetics Small vs. Kinetics Paradigm Fund | Kinetics Small vs. Kinetics Market Opportunities | Kinetics Small vs. Pear Tree Polaris | Kinetics Small vs. Amg Managers Loomis |
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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