Correlation Between Needham Aggressive and American Funds
Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and American Funds 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 American Funds 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 American Funds Capital, you can compare the effects of market volatilities on Needham Aggressive and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and American Funds.
Diversification Opportunities for Needham Aggressive and American Funds
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Needham and American is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and American Funds Capital in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Capital 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Capital has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and American Funds go up and down completely randomly.
Pair Corralation between Needham Aggressive and American Funds
Assuming the 90 days horizon Needham Aggressive Growth is expected to generate 2.63 times more return on investment than American Funds. However, Needham Aggressive is 2.63 times more volatile than American Funds Capital. It trades about 0.09 of its potential returns per unit of risk. American Funds Capital is currently generating about 0.09 per unit of risk. If you would invest 3,026 in Needham Aggressive Growth on September 12, 2024 and sell it today you would earn a total of 2,125 from holding Needham Aggressive Growth or generate 70.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Aggressive Growth vs. American Funds Capital
Performance |
| Timeline |
| Needham Aggressive Growth |
| American Funds Capital |
Needham Aggressive and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Aggressive and American Funds
The main advantage of trading using opposite Needham Aggressive and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' 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 |
| American Funds vs. Allianzgi Convertible Income | American Funds vs. Fidelity Sai Convertible | American Funds vs. Absolute Convertible Arbitrage | American Funds vs. Rationalpier 88 Convertible |
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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