Correlation Between Needham Small and Jhancock Real
Can any of the company-specific risk be diversified away by investing in both Needham Small and Jhancock Real 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 Jhancock Real 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 Jhancock Real Estate, you can compare the effects of market volatilities on Needham Small and Jhancock Real 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 Jhancock Real. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Small and Jhancock Real.
Diversification Opportunities for Needham Small and Jhancock Real
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Needham and Jhancock is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap and Jhancock Real Estate in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jhancock Real Estate 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 Jhancock Real. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jhancock Real Estate has no effect on the direction of Needham Small i.e., Needham Small and Jhancock Real go up and down completely randomly.
Pair Corralation between Needham Small and Jhancock Real
Assuming the 90 days horizon Needham Small Cap is expected to generate 1.79 times more return on investment than Jhancock Real. However, Needham Small is 1.79 times more volatile than Jhancock Real Estate. It trades about 0.04 of its potential returns per unit of risk. Jhancock Real Estate is currently generating about 0.03 per unit of risk. If you would invest 1,595 in Needham Small Cap on October 16, 2024 and sell it today you would earn a total of 275.00 from holding Needham Small Cap or generate 17.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Small Cap vs. Jhancock Real Estate
Performance |
| Timeline |
| Needham Small Cap |
| Jhancock Real Estate |
Needham Small and Jhancock Real Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Small and Jhancock Real
The main advantage of trading using opposite Needham Small and Jhancock Real positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Small position performs unexpectedly, Jhancock Real 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 Jhancock Real will offset losses from the drop in Jhancock Real'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 |
| Jhancock Real vs. Edward Jones Money | Jhancock Real vs. Principal Fds Money | Jhancock Real vs. Putnam Money Market | Jhancock Real vs. Voya Government Money |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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