Correlation Between Needham Small and Pimco Emerging
Can any of the company-specific risk be diversified away by investing in both Needham Small and Pimco Emerging 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 Pimco Emerging 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 Pimco Emerging Local, you can compare the effects of market volatilities on Needham Small and Pimco Emerging 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 Pimco Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Small and Pimco Emerging.
Diversification Opportunities for Needham Small and Pimco Emerging
-0.08 | Correlation Coefficient |
Good diversification
The 3 months correlation between Needham and Pimco is -0.08. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap and Pimco Emerging Local in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Emerging Local 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 Pimco Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Emerging Local has no effect on the direction of Needham Small i.e., Needham Small and Pimco Emerging go up and down completely randomly.
Pair Corralation between Needham Small and Pimco Emerging
Assuming the 90 days horizon Needham Small Cap is expected to generate 2.91 times more return on investment than Pimco Emerging. However, Needham Small is 2.91 times more volatile than Pimco Emerging Local. It trades about 0.21 of its potential returns per unit of risk. Pimco Emerging Local is currently generating about 0.19 per unit of risk. If you would invest 1,878 in Needham Small Cap on October 25, 2024 and sell it today you would earn a total of 98.00 from holding Needham Small Cap or generate 5.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Small Cap vs. Pimco Emerging Local
Performance |
| Timeline |
| Needham Small Cap |
| Pimco Emerging Local |
Needham Small and Pimco Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Small and Pimco Emerging
The main advantage of trading using opposite Needham Small and Pimco Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Small position performs unexpectedly, Pimco Emerging 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 Pimco Emerging will offset losses from the drop in Pimco Emerging'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 |
| Pimco Emerging vs. Calvert Moderate Allocation | Pimco Emerging vs. Blackrock Moderate Prepared | Pimco Emerging vs. Voya Retirement Moderate | Pimco Emerging vs. Wilmington Trust Retirement |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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