Correlation Between Needham Aggressive and Wasatch Micro
Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and Wasatch Micro 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 Wasatch Micro 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 Wasatch Micro Cap, you can compare the effects of market volatilities on Needham Aggressive and Wasatch Micro 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 Wasatch Micro. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Wasatch Micro.
Diversification Opportunities for Needham Aggressive and Wasatch Micro
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Needham and Wasatch is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Wasatch Micro Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wasatch Micro 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 Wasatch Micro. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wasatch Micro Cap has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Wasatch Micro go up and down completely randomly.
Pair Corralation between Needham Aggressive and Wasatch Micro
Assuming the 90 days horizon Needham Aggressive Growth is expected to generate 1.42 times more return on investment than Wasatch Micro. However, Needham Aggressive is 1.42 times more volatile than Wasatch Micro Cap. It trades about 0.13 of its potential returns per unit of risk. Wasatch Micro Cap is currently generating about 0.17 per unit of risk. 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 | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Aggressive Growth vs. Wasatch Micro Cap
Performance |
| Timeline |
| Needham Aggressive Growth |
| Wasatch Micro Cap |
Needham Aggressive and Wasatch Micro Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Aggressive and Wasatch Micro
The main advantage of trading using opposite Needham Aggressive and Wasatch Micro positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive position performs unexpectedly, Wasatch Micro 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 Wasatch Micro will offset losses from the drop in Wasatch Micro'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 |
| Wasatch Micro vs. Wasatch Micro Cap | Wasatch Micro vs. Wasatch International Opportunities | Wasatch Micro vs. Wasatch Small Cap | Wasatch Micro vs. Wasatch Emerging Markets |
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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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