Correlation Between Needham Aggressive and California High-yield
Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and California High-yield 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 California High-yield 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 California High Yield Municipal, you can compare the effects of market volatilities on Needham Aggressive and California High-yield 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 California High-yield. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and California High-yield.
Diversification Opportunities for Needham Aggressive and California High-yield
-0.06 | Correlation Coefficient |
Good diversification
The 3 months correlation between Needham and California is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and California High Yield Municipa in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California High Yield 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 California High-yield. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California High Yield has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and California High-yield go up and down completely randomly.
Pair Corralation between Needham Aggressive and California High-yield
Assuming the 90 days horizon Needham Aggressive Growth is expected to generate 4.75 times more return on investment than California High-yield. However, Needham Aggressive is 4.75 times more volatile than California High Yield Municipal. It trades about 0.07 of its potential returns per unit of risk. California High Yield Municipal is currently generating about 0.07 per unit of risk. If you would invest 3,188 in Needham Aggressive Growth on August 24, 2024 and sell it today you would earn a total of 1,662 from holding Needham Aggressive Growth or generate 52.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Aggressive Growth vs. California High Yield Municipa
Performance |
| Timeline |
| Needham Aggressive Growth |
| California High Yield |
Needham Aggressive and California High-yield Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Aggressive and California High-yield
The main advantage of trading using opposite Needham Aggressive and California High-yield positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive position performs unexpectedly, California High-yield 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 California High-yield will offset losses from the drop in California High-yield's long position.| Needham Aggressive vs. Vanguard Small Cap Growth | Needham Aggressive vs. Vanguard Small Cap Growth | Needham Aggressive vs. Vanguard Explorer Fund | Needham Aggressive vs. Vanguard Explorer Fund |
| California High-yield vs. Vanguard California Long Term | California High-yield vs. HUMANA INC | California High-yield vs. Aquagold International | California High-yield 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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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