Correlation Between Needham Aggressive and Sp Smallcap
Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and Sp Smallcap 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 Sp Smallcap 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 Sp Smallcap 600, you can compare the effects of market volatilities on Needham Aggressive and Sp Smallcap 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 Sp Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Sp Smallcap.
Diversification Opportunities for Needham Aggressive and Sp Smallcap
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Needham and RYSVX is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Sp Smallcap 600 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Smallcap 600 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 Sp Smallcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Smallcap 600 has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Sp Smallcap go up and down completely randomly.
Pair Corralation between Needham Aggressive and Sp Smallcap
Assuming the 90 days horizon Needham Aggressive Growth is expected to generate 1.14 times more return on investment than Sp Smallcap. However, Needham Aggressive is 1.14 times more volatile than Sp Smallcap 600. It trades about -0.06 of its potential returns per unit of risk. Sp Smallcap 600 is currently generating about -0.24 per unit of risk. If you would invest 5,114 in Needham Aggressive Growth on October 11, 2024 and sell it today you would lose (92.00) from holding Needham Aggressive Growth or give up 1.8% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Aggressive Growth vs. Sp Smallcap 600
Performance |
| Timeline |
| Needham Aggressive Growth |
| Sp Smallcap 600 |
Needham Aggressive and Sp Smallcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Aggressive and Sp Smallcap
The main advantage of trading using opposite Needham Aggressive and Sp Smallcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive position performs unexpectedly, Sp Smallcap 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 Sp Smallcap will offset losses from the drop in Sp Smallcap'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 |
| Sp Smallcap vs. Icon Natural Resources | Sp Smallcap vs. Fidelity Advisor Energy | Sp Smallcap vs. Goehring Rozencwajg Resources | Sp Smallcap vs. Transamerica Mlp Energy |
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 Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.
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