Correlation Between Needham Aggressive and Thompson Largecap
Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and Thompson Largecap 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 Thompson Largecap 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 Thompson Largecap Fund, you can compare the effects of market volatilities on Needham Aggressive and Thompson Largecap 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 Thompson Largecap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Thompson Largecap.
Diversification Opportunities for Needham Aggressive and Thompson Largecap
0.61 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Needham and Thompson is 0.61. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Thompson Largecap Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thompson Largecap 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 Thompson Largecap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thompson Largecap has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Thompson Largecap go up and down completely randomly.
Pair Corralation between Needham Aggressive and Thompson Largecap
Assuming the 90 days horizon Needham Aggressive Growth is expected to generate 1.33 times more return on investment than Thompson Largecap. However, Needham Aggressive is 1.33 times more volatile than Thompson Largecap Fund. It trades about 0.08 of its potential returns per unit of risk. Thompson Largecap Fund is currently generating about 0.07 per unit of risk. If you would invest 2,982 in Needham Aggressive Growth on August 30, 2024 and sell it today you would earn a total of 1,815 from holding Needham Aggressive Growth or generate 60.87% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Aggressive Growth vs. Thompson Largecap Fund
Performance |
| Timeline |
| Needham Aggressive Growth |
| Thompson Largecap |
Needham Aggressive and Thompson Largecap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Aggressive and Thompson Largecap
The main advantage of trading using opposite Needham Aggressive and Thompson Largecap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive position performs unexpectedly, Thompson Largecap 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 Thompson Largecap will offset losses from the drop in Thompson Largecap'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 |
| Thompson Largecap vs. Clipper Fund Inc | Thompson Largecap vs. Meridian Trarian Fund | Thompson Largecap vs. Meridian Growth Fund | Thompson Largecap vs. Muhlenkamp Fund Institutional |
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 Companies Directory module to evaluate performance of over 100,000 Stocks, Funds, and ETFs against different fundamentals.
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