Correlation Between Needham Aggressive and Eventide Large
Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and Eventide Large 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 Eventide Large 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 Eventide Large Cap, you can compare the effects of market volatilities on Needham Aggressive and Eventide Large 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 Eventide Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Eventide Large.
Diversification Opportunities for Needham Aggressive and Eventide Large
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Needham and Eventide is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Eventide Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eventide Large 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 Eventide Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eventide Large Cap has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Eventide Large go up and down completely randomly.
Pair Corralation between Needham Aggressive and Eventide Large
Assuming the 90 days horizon Needham Aggressive is expected to generate 2.07 times less return on investment than Eventide Large. In addition to that, Needham Aggressive is 1.73 times more volatile than Eventide Large Cap. It trades about 0.02 of its total potential returns per unit of risk. Eventide Large Cap is currently generating about 0.07 per unit of volatility. If you would invest 1,382 in Eventide Large Cap on September 12, 2024 and sell it today you would earn a total of 106.00 from holding Eventide Large Cap or generate 7.67% 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. Eventide Large Cap
Performance |
| Timeline |
| Needham Aggressive Growth |
| Eventide Large Cap |
Needham Aggressive and Eventide Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Aggressive and Eventide Large
The main advantage of trading using opposite Needham Aggressive and Eventide Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive position performs unexpectedly, Eventide Large 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 Eventide Large will offset losses from the drop in Eventide Large's long position.| Needham Aggressive vs. Needham Aggressive Growth | Needham Aggressive vs. Ultramid Cap Profund Ultramid Cap | Needham Aggressive vs. HUMANA INC | Needham Aggressive vs. Barloworld Ltd ADR |
| Eventide Large vs. Praxis Growth Index | Eventide Large vs. Qs Defensive Growth | Eventide Large vs. Needham Aggressive Growth | Eventide Large vs. Rational Defensive Growth |
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 Portfolio Optimization module to compute new portfolio that will generate highest expected return given your specified tolerance for risk.
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