Correlation Between Needham Aggressive and Multimanager Lifestyle
Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and Multimanager Lifestyle 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 Multimanager Lifestyle 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 Multimanager Lifestyle Aggressive, you can compare the effects of market volatilities on Needham Aggressive and Multimanager Lifestyle 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 Multimanager Lifestyle. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Multimanager Lifestyle.
Diversification Opportunities for Needham Aggressive and Multimanager Lifestyle
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Needham and Multimanager is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Multimanager Lifestyle Aggress in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Multimanager Lifestyle 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 Multimanager Lifestyle. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Multimanager Lifestyle has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Multimanager Lifestyle go up and down completely randomly.
Pair Corralation between Needham Aggressive and Multimanager Lifestyle
Assuming the 90 days horizon Needham Aggressive Growth is expected to generate 1.97 times more return on investment than Multimanager Lifestyle. However, Needham Aggressive is 1.97 times more volatile than Multimanager Lifestyle Aggressive. It trades about 0.06 of its potential returns per unit of risk. Multimanager Lifestyle Aggressive is currently generating about 0.11 per unit of risk. If you would invest 4,180 in Needham Aggressive Growth on September 12, 2024 and sell it today you would earn a total of 934.00 from holding Needham Aggressive Growth or generate 22.34% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.6% |
| Values | Daily Returns |
Needham Aggressive Growth vs. Multimanager Lifestyle Aggress
Performance |
| Timeline |
| Needham Aggressive Growth |
| Multimanager Lifestyle |
Needham Aggressive and Multimanager Lifestyle Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Aggressive and Multimanager Lifestyle
The main advantage of trading using opposite Needham Aggressive and Multimanager Lifestyle positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive position performs unexpectedly, Multimanager Lifestyle 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 Multimanager Lifestyle will offset losses from the drop in Multimanager Lifestyle'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 |
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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.
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