Correlation Between Needham Small and Nuveen Small
Can any of the company-specific risk be diversified away by investing in both Needham Small and Nuveen Small 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 Small and Nuveen Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Needham Small Cap and Nuveen Small Cap, you can compare the effects of market volatilities on Needham Small and Nuveen Small 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 Small with a short position of Nuveen Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Small and Nuveen Small.
Diversification Opportunities for Needham Small and Nuveen Small
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Needham and NUVEEN is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap and Nuveen Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuveen Small Cap and Needham Small 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 Small Cap are associated (or correlated) with Nuveen Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuveen Small Cap has no effect on the direction of Needham Small i.e., Needham Small and Nuveen Small go up and down completely randomly.
Pair Corralation between Needham Small and Nuveen Small
Assuming the 90 days horizon Needham Small Cap is expected to generate 1.35 times more return on investment than Nuveen Small. However, Needham Small is 1.35 times more volatile than Nuveen Small Cap. It trades about 0.22 of its potential returns per unit of risk. Nuveen Small Cap is currently generating about 0.25 per unit of risk. If you would invest 1,852 in Needham Small Cap on October 29, 2024 and sell it today you would earn a total of 95.00 from holding Needham Small Cap or generate 5.13% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Small Cap vs. Nuveen Small Cap
Performance |
| Timeline |
| Needham Small Cap |
| Nuveen Small Cap |
Needham Small and Nuveen Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Small and Nuveen Small
The main advantage of trading using opposite Needham Small and Nuveen Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Small position performs unexpectedly, Nuveen Small 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 Nuveen Small will offset losses from the drop in Nuveen Small's long position.| Needham Small vs. Needham Aggressive Growth | Needham Small vs. Needham Growth Fund | Needham Small vs. Baron Opportunity Fund | Needham Small vs. Jacob Micro Cap |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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