Correlation Between Needham Aggressive and Kensington Dynamic
Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and Kensington Dynamic 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 Kensington Dynamic 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 Kensington Dynamic Growth, you can compare the effects of market volatilities on Needham Aggressive and Kensington Dynamic 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 Kensington Dynamic. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Kensington Dynamic.
Diversification Opportunities for Needham Aggressive and Kensington Dynamic
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Needham and Kensington is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Kensington Dynamic Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Kensington Dynamic Growth 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 Kensington Dynamic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Kensington Dynamic Growth has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Kensington Dynamic go up and down completely randomly.
Pair Corralation between Needham Aggressive and Kensington Dynamic
Assuming the 90 days horizon Needham Aggressive Growth is expected to generate 2.21 times more return on investment than Kensington Dynamic. However, Needham Aggressive is 2.21 times more volatile than Kensington Dynamic Growth. It trades about 0.13 of its potential returns per unit of risk. Kensington Dynamic Growth is currently generating about 0.18 per unit of risk. If you would invest 4,934 in Needham Aggressive Growth on September 13, 2024 and sell it today you would earn a total of 180.00 from holding Needham Aggressive Growth or generate 3.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Aggressive Growth vs. Kensington Dynamic Growth
Performance |
| Timeline |
| Needham Aggressive Growth |
| Kensington Dynamic Growth |
Needham Aggressive and Kensington Dynamic Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Aggressive and Kensington Dynamic
The main advantage of trading using opposite Needham Aggressive and Kensington Dynamic positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive position performs unexpectedly, Kensington Dynamic 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 Kensington Dynamic will offset losses from the drop in Kensington Dynamic's long position.| Needham Aggressive vs. Needham Aggressive Growth | Needham Aggressive vs. Needham Small Cap | Needham Aggressive vs. Ultramid Cap Profund Ultramid Cap | Needham Aggressive vs. Fidelity Advisor Semiconductors |
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 Global Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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