Correlation Between Needham Small and Jacob Internet
Can any of the company-specific risk be diversified away by investing in both Needham Small and Jacob Internet 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 Jacob Internet 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 Jacob Internet Fund, you can compare the effects of market volatilities on Needham Small and Jacob Internet 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 Jacob Internet. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Small and Jacob Internet.
Diversification Opportunities for Needham Small and Jacob Internet
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Needham and Jacob is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap and Jacob Internet Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jacob Internet 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 Jacob Internet. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jacob Internet has no effect on the direction of Needham Small i.e., Needham Small and Jacob Internet go up and down completely randomly.
Pair Corralation between Needham Small and Jacob Internet
Assuming the 90 days horizon Needham Small is expected to generate 5.21 times less return on investment than Jacob Internet. But when comparing it to its historical volatility, Needham Small Cap is 1.02 times less risky than Jacob Internet. It trades about 0.09 of its potential returns per unit of risk. Jacob Internet Fund is currently generating about 0.44 of returns per unit of risk over similar time horizon. If you would invest 500.00 in Jacob Internet Fund on August 29, 2024 and sell it today you would earn a total of 96.00 from holding Jacob Internet Fund or generate 19.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Small Cap vs. Jacob Internet Fund
Performance |
| Timeline |
| Needham Small Cap |
| Jacob Internet |
Needham Small and Jacob Internet Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Small and Jacob Internet
The main advantage of trading using opposite Needham Small and Jacob Internet positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Small position performs unexpectedly, Jacob Internet 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 Jacob Internet will offset losses from the drop in Jacob Internet's long position.| Needham Small vs. Putnam Equity Income | Needham Small vs. Putnam Growth Opportunities | Needham Small vs. HUMANA INC | Needham Small vs. Aquagold International |
| Jacob Internet vs. Kinetics Internet Fund | Jacob Internet vs. Internet Ultrasector Profund | Jacob Internet vs. Firsthand Technology Opportunities | Jacob Internet vs. Berkshire Focus |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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