Correlation Between Needham Aggressive and Emerging Growth
Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and Emerging Growth 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 Emerging Growth 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 Emerging Growth Fund, you can compare the effects of market volatilities on Needham Aggressive and Emerging Growth 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 Emerging Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Emerging Growth.
Diversification Opportunities for Needham Aggressive and Emerging Growth
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Needham and Emerging is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Emerging Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Emerging Growth 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 Emerging Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Emerging Growth has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Emerging Growth go up and down completely randomly.
Pair Corralation between Needham Aggressive and Emerging Growth
Assuming the 90 days horizon Needham Aggressive is expected to generate 1.03 times less return on investment than Emerging Growth. In addition to that, Needham Aggressive is 1.02 times more volatile than Emerging Growth Fund. It trades about 0.07 of its total potential returns per unit of risk. Emerging Growth Fund is currently generating about 0.07 per unit of volatility. If you would invest 1,032 in Emerging Growth Fund on September 12, 2024 and sell it today you would earn a total of 345.00 from holding Emerging Growth Fund or generate 33.43% 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. Emerging Growth Fund
Performance |
| Timeline |
| Needham Aggressive Growth |
| Emerging Growth |
Needham Aggressive and Emerging Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Aggressive and Emerging Growth
The main advantage of trading using opposite Needham Aggressive and Emerging Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive position performs unexpectedly, Emerging Growth 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 Emerging Growth will offset losses from the drop in Emerging Growth's long position.| Needham Aggressive vs. Ultramid Cap Profund Ultramid Cap | Needham Aggressive vs. HUMANA INC | Needham Aggressive vs. Barloworld Ltd ADR | Needham Aggressive vs. Morningstar Unconstrained Allocation |
| Emerging Growth vs. Needham Aggressive Growth | Emerging Growth vs. Ultramid Cap Profund Ultramid Cap | Emerging Growth vs. HUMANA INC | Emerging Growth vs. Barloworld Ltd ADR |
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 Piotroski F Score module to get Piotroski F Score based on the binary analysis strategy of nine different fundamentals.
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