Correlation Between Needham Small and Inflation-protected
Can any of the company-specific risk be diversified away by investing in both Needham Small and Inflation-protected 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 Inflation-protected 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 Inflation Protected Bond Fund, you can compare the effects of market volatilities on Needham Small and Inflation-protected 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 Inflation-protected. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Small and Inflation-protected.
Diversification Opportunities for Needham Small and Inflation-protected
0.51 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Needham and Inflation-protected is 0.51. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap and Inflation Protected Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Inflation Protected 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 Inflation-protected. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Inflation Protected has no effect on the direction of Needham Small i.e., Needham Small and Inflation-protected go up and down completely randomly.
Pair Corralation between Needham Small and Inflation-protected
Assuming the 90 days horizon Needham Small Cap is expected to generate 2.43 times more return on investment than Inflation-protected. However, Needham Small is 2.43 times more volatile than Inflation Protected Bond Fund. It trades about -0.03 of its potential returns per unit of risk. Inflation Protected Bond Fund is currently generating about -0.29 per unit of risk. If you would invest 1,945 in Needham Small Cap on October 10, 2024 and sell it today you would lose (25.00) from holding Needham Small Cap or give up 1.29% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Small Cap vs. Inflation Protected Bond Fund
Performance |
| Timeline |
| Needham Small Cap |
| Inflation Protected |
Needham Small and Inflation-protected Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Small and Inflation-protected
The main advantage of trading using opposite Needham Small and Inflation-protected positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Small position performs unexpectedly, Inflation-protected 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 Inflation-protected will offset losses from the drop in Inflation-protected'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 |
| Inflation-protected vs. Rbc Ultra Short Fixed | Inflation-protected vs. Versatile Bond Portfolio | Inflation-protected vs. California Bond Fund | Inflation-protected vs. Siit High Yield |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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