Correlation Between Needham Small and Aggressive Balanced
Can any of the company-specific risk be diversified away by investing in both Needham Small and Aggressive Balanced 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 Aggressive Balanced 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 Aggressive Balanced Allocation, you can compare the effects of market volatilities on Needham Small and Aggressive Balanced 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 Aggressive Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Small and Aggressive Balanced.
Diversification Opportunities for Needham Small and Aggressive Balanced
0.39 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Needham and Aggressive is 0.39. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap and Aggressive Balanced Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aggressive Balanced 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 Aggressive Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aggressive Balanced has no effect on the direction of Needham Small i.e., Needham Small and Aggressive Balanced go up and down completely randomly.
Pair Corralation between Needham Small and Aggressive Balanced
Assuming the 90 days horizon Needham Small is expected to generate 72.77 times less return on investment than Aggressive Balanced. In addition to that, Needham Small is 2.63 times more volatile than Aggressive Balanced Allocation. It trades about 0.0 of its total potential returns per unit of risk. Aggressive Balanced Allocation is currently generating about 0.24 per unit of volatility. If you would invest 1,185 in Aggressive Balanced Allocation on November 8, 2024 and sell it today you would earn a total of 38.00 from holding Aggressive Balanced Allocation or generate 3.21% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Small Cap vs. Aggressive Balanced Allocation
Performance |
| Timeline |
| Needham Small Cap |
| Aggressive Balanced |
Needham Small and Aggressive Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Small and Aggressive Balanced
The main advantage of trading using opposite Needham Small and Aggressive Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Small position performs unexpectedly, Aggressive Balanced 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 Aggressive Balanced will offset losses from the drop in Aggressive Balanced's long position.| Needham Small vs. Needham Aggressive Growth | Needham Small vs. Baron Opportunity Fund | Needham Small vs. Jacob Micro Cap |
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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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.
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