Correlation Between Needham Aggressive and Transamerica High
Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and Transamerica High 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 Transamerica High 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 Transamerica High Yield, you can compare the effects of market volatilities on Needham Aggressive and Transamerica High 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 Transamerica High. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Transamerica High.
Diversification Opportunities for Needham Aggressive and Transamerica High
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Needham and Transamerica is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Transamerica High Yield in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Transamerica High Yield 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 Transamerica High. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Transamerica High Yield has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Transamerica High go up and down completely randomly.
Pair Corralation between Needham Aggressive and Transamerica High
Assuming the 90 days horizon Needham Aggressive Growth is expected to generate 5.36 times more return on investment than Transamerica High. However, Needham Aggressive is 5.36 times more volatile than Transamerica High Yield. It trades about 0.02 of its potential returns per unit of risk. Transamerica High Yield is currently generating about 0.07 per unit of risk. If you would invest 4,903 in Needham Aggressive Growth on September 29, 2024 and sell it today you would earn a total of 112.00 from holding Needham Aggressive Growth or generate 2.28% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Aggressive Growth vs. Transamerica High Yield
Performance |
| Timeline |
| Needham Aggressive Growth |
| Transamerica High Yield |
Needham Aggressive and Transamerica High Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Aggressive and Transamerica High
The main advantage of trading using opposite Needham Aggressive and Transamerica High positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive position performs unexpectedly, Transamerica High 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 Transamerica High will offset losses from the drop in Transamerica High's long position.| Needham Aggressive vs. Needham Small Cap | Needham Aggressive vs. Needham Growth Fund | Needham Aggressive vs. Oberweis Micro Cap Fund |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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