Correlation Between Needham Aggressive and Franklin Mutual
Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and Franklin Mutual 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 Franklin Mutual 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 Franklin Mutual Beacon, you can compare the effects of market volatilities on Needham Aggressive and Franklin Mutual 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 Franklin Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Franklin Mutual.
Diversification Opportunities for Needham Aggressive and Franklin Mutual
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Needham and Franklin is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Franklin Mutual Beacon in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Mutual Beacon 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 Franklin Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Mutual Beacon has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Franklin Mutual go up and down completely randomly.
Pair Corralation between Needham Aggressive and Franklin Mutual
Assuming the 90 days horizon Needham Aggressive Growth is expected to generate 2.72 times more return on investment than Franklin Mutual. However, Needham Aggressive is 2.72 times more volatile than Franklin Mutual Beacon. It trades about 0.31 of its potential returns per unit of risk. Franklin Mutual Beacon is currently generating about 0.3 per unit of risk. If you would invest 4,624 in Needham Aggressive Growth on September 3, 2024 and sell it today you would earn a total of 470.00 from holding Needham Aggressive Growth or generate 10.16% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Aggressive Growth vs. Franklin Mutual Beacon
Performance |
| Timeline |
| Needham Aggressive Growth |
| Franklin Mutual Beacon |
Needham Aggressive and Franklin Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Aggressive and Franklin Mutual
The main advantage of trading using opposite Needham Aggressive and Franklin Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive position performs unexpectedly, Franklin Mutual 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 Franklin Mutual will offset losses from the drop in Franklin Mutual'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 |
| Franklin Mutual vs. Inverse Government Long | Franklin Mutual vs. Aig Government Money | Franklin Mutual vs. Dunham Porategovernment Bond | Franklin Mutual vs. Us Government Securities |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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