Correlation Between Needham Small and Massmutual Select
Can any of the company-specific risk be diversified away by investing in both Needham Small and Massmutual Select 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 Massmutual Select 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 Massmutual Select Small, you can compare the effects of market volatilities on Needham Small and Massmutual Select 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 Massmutual Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Small and Massmutual Select.
Diversification Opportunities for Needham Small and Massmutual Select
0.7 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Needham and Massmutual is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap and Massmutual Select Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Massmutual Select Small 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 Massmutual Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Massmutual Select Small has no effect on the direction of Needham Small i.e., Needham Small and Massmutual Select go up and down completely randomly.
Pair Corralation between Needham Small and Massmutual Select
Assuming the 90 days horizon Needham Small Cap is expected to generate 0.66 times more return on investment than Massmutual Select. However, Needham Small Cap is 1.52 times less risky than Massmutual Select. It trades about 0.27 of its potential returns per unit of risk. Massmutual Select Small is currently generating about -0.13 per unit of risk. If you would invest 1,783 in Needham Small Cap on September 19, 2024 and sell it today you would earn a total of 138.00 from holding Needham Small Cap or generate 7.74% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Needham Small Cap vs. Massmutual Select Small
Performance |
| Timeline |
| Needham Small Cap |
| Massmutual Select Small |
Needham Small and Massmutual Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Small and Massmutual Select
The main advantage of trading using opposite Needham Small and Massmutual Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Small position performs unexpectedly, Massmutual Select 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 Massmutual Select will offset losses from the drop in Massmutual Select'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 |
| Massmutual Select vs. Smallcap Growth Fund | Massmutual Select vs. Ab Small Cap | Massmutual Select vs. Needham Small Cap | Massmutual Select vs. Champlain Small |
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 Earnings Calls module to check upcoming earnings announcements updated hourly across public exchanges.
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