Correlation Between Needham Aggressive and Pioneer Disciplined

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Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and Pioneer Disciplined 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 Pioneer Disciplined 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 Pioneer Disciplined Value, you can compare the effects of market volatilities on Needham Aggressive and Pioneer Disciplined 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 Pioneer Disciplined. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Pioneer Disciplined.

Diversification Opportunities for Needham Aggressive and Pioneer Disciplined

0.74
  Correlation Coefficient

Poor diversification

The 3 months correlation between Needham and Pioneer is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Pioneer Disciplined Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Disciplined Value 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 Pioneer Disciplined. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Disciplined Value has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Pioneer Disciplined go up and down completely randomly.

Pair Corralation between Needham Aggressive and Pioneer Disciplined

Assuming the 90 days horizon Needham Aggressive Growth is expected to generate 2.23 times more return on investment than Pioneer Disciplined. However, Needham Aggressive is 2.23 times more volatile than Pioneer Disciplined Value. It trades about 0.27 of its potential returns per unit of risk. Pioneer Disciplined Value is currently generating about 0.02 per unit of risk. If you would invest  4,784  in Needham Aggressive Growth on September 15, 2024 and sell it today you would earn a total of  343.00  from holding Needham Aggressive Growth or generate 7.17% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthSignificant
Accuracy100.0%
ValuesDaily Returns

Needham Aggressive Growth  vs.  Pioneer Disciplined Value

 Performance 
       Timeline  
Needham Aggressive Growth 

Risk-Adjusted Performance

7 of 100

 
Weak
 
Strong
OK
Compared to the overall equity markets, risk-adjusted returns on investments in Needham Aggressive Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Needham Aggressive may actually be approaching a critical reversion point that can send shares even higher in January 2025.
Pioneer Disciplined Value 

Risk-Adjusted Performance

6 of 100

 
Weak
 
Strong
Modest
Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Disciplined Value are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Pioneer Disciplined is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Needham Aggressive and Pioneer Disciplined Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Needham Aggressive and Pioneer Disciplined

The main advantage of trading using opposite Needham Aggressive and Pioneer Disciplined positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive position performs unexpectedly, Pioneer Disciplined 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 Pioneer Disciplined will offset losses from the drop in Pioneer Disciplined's long position.
The idea behind Needham Aggressive Growth and Pioneer Disciplined Value pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.

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