Correlation Between NYSE Composite and Needham Growth
Can any of the company-specific risk be diversified away by investing in both NYSE Composite and Needham Growth 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 NYSE Composite and Needham Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between NYSE Composite and Needham Growth Fund, you can compare the effects of market volatilities on NYSE Composite and Needham Growth 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 NYSE Composite with a short position of Needham Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of NYSE Composite and Needham Growth.
Diversification Opportunities for NYSE Composite and Needham Growth
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between NYSE and Needham is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding NYSE Composite and Needham Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Growth and NYSE Composite 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 NYSE Composite are associated (or correlated) with Needham Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Growth has no effect on the direction of NYSE Composite i.e., NYSE Composite and Needham Growth go up and down completely randomly.
Pair Corralation between NYSE Composite and Needham Growth
Assuming the 90 days trading horizon NYSE Composite is expected to generate 0.34 times more return on investment than Needham Growth. However, NYSE Composite is 2.96 times less risky than Needham Growth. It trades about 0.42 of its potential returns per unit of risk. Needham Growth Fund is currently generating about 0.01 per unit of risk. If you would invest 1,923,895 in NYSE Composite on September 1, 2024 and sell it today you would earn a total of 103,309 from holding NYSE Composite or generate 5.37% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
NYSE Composite vs. Needham Growth Fund
Performance |
| Timeline |
NYSE Composite and Needham Growth Volatility Contrast
Predicted Return Density |
| Returns |
NYSE Composite
Pair trading matchups for NYSE Composite
Needham Growth Fund
Pair trading matchups for Needham Growth
Pair Trading with NYSE Composite and Needham Growth
The main advantage of trading using opposite NYSE Composite and Needham Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if NYSE Composite position performs unexpectedly, Needham Growth 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 Needham Growth will offset losses from the drop in Needham Growth's long position.| NYSE Composite vs. Acumen Pharmaceuticals | NYSE Composite vs. Mind Medicine | NYSE Composite vs. NL Industries | NYSE Composite vs. Ecovyst |
| Needham Growth vs. Needham Aggressive Growth | Needham Growth vs. Needham Small Cap | Needham Growth vs. Aggressive Investors 1 | Needham Growth vs. Meridian Trarian 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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