Correlation Between Needham Aggressive and Mainstay Moderate
Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and Mainstay Moderate 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 Mainstay Moderate 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 Mainstay Moderate Growth, you can compare the effects of market volatilities on Needham Aggressive and Mainstay Moderate 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 Mainstay Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Mainstay Moderate.
Diversification Opportunities for Needham Aggressive and Mainstay Moderate
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Needham and Mainstay is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Mainstay Moderate Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Moderate 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 Mainstay Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Moderate Growth has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Mainstay Moderate go up and down completely randomly.
Pair Corralation between Needham Aggressive and Mainstay Moderate
Assuming the 90 days horizon Needham Aggressive Growth is expected to generate 2.07 times more return on investment than Mainstay Moderate. However, Needham Aggressive is 2.07 times more volatile than Mainstay Moderate Growth. It trades about 0.09 of its potential returns per unit of risk. Mainstay Moderate Growth is currently generating about 0.09 per unit of risk. If you would invest 3,068 in Needham Aggressive Growth on September 5, 2024 and sell it today you would earn a total of 2,133 from holding Needham Aggressive Growth or generate 69.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Needham Aggressive Growth vs. Mainstay Moderate Growth
Performance |
| Timeline |
| Needham Aggressive Growth |
| Mainstay Moderate Growth |
Needham Aggressive and Mainstay Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Aggressive and Mainstay Moderate
The main advantage of trading using opposite Needham Aggressive and Mainstay Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive position performs unexpectedly, Mainstay Moderate 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 Mainstay Moderate will offset losses from the drop in Mainstay Moderate'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 |
| Mainstay Moderate vs. Mainstay Tax Free | Mainstay Moderate vs. Mainstay Large Cap | Mainstay Moderate vs. Mainstay Large Cap | Mainstay Moderate vs. Mainstay Large Cap |
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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.
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