Correlation Between Needham Small and Sp Midcap
Can any of the company-specific risk be diversified away by investing in both Needham Small and Sp Midcap 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 Sp Midcap 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 Sp Midcap Index, you can compare the effects of market volatilities on Needham Small and Sp Midcap 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 Sp Midcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Small and Sp Midcap.
Diversification Opportunities for Needham Small and Sp Midcap
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Needham and SPMIX is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap and Sp Midcap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Sp Midcap Index 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 Sp Midcap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Sp Midcap Index has no effect on the direction of Needham Small i.e., Needham Small and Sp Midcap go up and down completely randomly.
Pair Corralation between Needham Small and Sp Midcap
Assuming the 90 days horizon Needham Small Cap is expected to generate 0.76 times more return on investment than Sp Midcap. However, Needham Small Cap is 1.31 times less risky than Sp Midcap. It trades about 0.1 of its potential returns per unit of risk. Sp Midcap Index is currently generating about -0.18 per unit of risk. If you would invest 1,892 in Needham Small Cap on September 13, 2024 and sell it today you would earn a total of 56.00 from holding Needham Small Cap or generate 2.96% 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. Sp Midcap Index
Performance |
| Timeline |
| Needham Small Cap |
| Sp Midcap Index |
Needham Small and Sp Midcap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Small and Sp Midcap
The main advantage of trading using opposite Needham Small and Sp Midcap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Small position performs unexpectedly, Sp Midcap 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 Sp Midcap will offset losses from the drop in Sp Midcap's long position.| Needham Small vs. Needham Aggressive Growth | Needham Small vs. Needham Growth Fund | Needham Small vs. Baron Opportunity Fund | Needham Small vs. Aquagold International |
| Sp Midcap vs. Shelton Emerging Markets | Sp Midcap vs. Shelton Emerging Markets | Sp Midcap vs. Shelton Funds | Sp Midcap vs. Nasdaq 100 Index Fund |
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 Stock Tickers module to use high-impact, comprehensive, and customizable stock tickers that can be easily integrated to any websites.
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