Correlation Between Needham Aggressive and Biotechnology Fund
Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and Biotechnology Fund 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 Biotechnology Fund 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 Biotechnology Fund Class, you can compare the effects of market volatilities on Needham Aggressive and Biotechnology Fund 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 Biotechnology Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Biotechnology Fund.
Diversification Opportunities for Needham Aggressive and Biotechnology Fund
-0.14 | Correlation Coefficient |
Good diversification
The 3 months correlation between Needham and Biotechnology is -0.14. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Biotechnology Fund Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Biotechnology Fund Class 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 Biotechnology Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Biotechnology Fund Class has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Biotechnology Fund go up and down completely randomly.
Pair Corralation between Needham Aggressive and Biotechnology Fund
Assuming the 90 days horizon Needham Aggressive is expected to generate 1.99 times less return on investment than Biotechnology Fund. In addition to that, Needham Aggressive is 1.56 times more volatile than Biotechnology Fund Class. It trades about 0.07 of its total potential returns per unit of risk. Biotechnology Fund Class is currently generating about 0.22 per unit of volatility. If you would invest 5,459 in Biotechnology Fund Class on November 1, 2024 and sell it today you would earn a total of 250.00 from holding Biotechnology Fund Class or generate 4.58% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Aggressive Growth vs. Biotechnology Fund Class
Performance |
| Timeline |
| Needham Aggressive Growth |
| Biotechnology Fund Class |
Needham Aggressive and Biotechnology Fund Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Aggressive and Biotechnology Fund
The main advantage of trading using opposite Needham Aggressive and Biotechnology Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive position performs unexpectedly, Biotechnology Fund 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 Biotechnology Fund will offset losses from the drop in Biotechnology Fund'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 |
| Biotechnology Fund vs. Needham Aggressive Growth | Biotechnology Fund vs. Vy Baron Growth | Biotechnology Fund vs. T Rowe Price | Biotechnology Fund 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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