Correlation Between Payden Absolute and Needham Aggressive
Can any of the company-specific risk be diversified away by investing in both Payden Absolute and Needham Aggressive 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 Payden Absolute and Needham Aggressive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Payden Absolute Return and Needham Aggressive Growth, you can compare the effects of market volatilities on Payden Absolute and Needham Aggressive 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 Payden Absolute with a short position of Needham Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Payden Absolute and Needham Aggressive.
Diversification Opportunities for Payden Absolute and Needham Aggressive
0.26 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Payden and Needham is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Payden Absolute Return and Needham Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Aggressive Growth and Payden Absolute 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 Payden Absolute Return are associated (or correlated) with Needham Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Aggressive Growth has no effect on the direction of Payden Absolute i.e., Payden Absolute and Needham Aggressive go up and down completely randomly.
Pair Corralation between Payden Absolute and Needham Aggressive
Assuming the 90 days horizon Payden Absolute is expected to generate 4.25 times less return on investment than Needham Aggressive. But when comparing it to its historical volatility, Payden Absolute Return is 19.2 times less risky than Needham Aggressive. It trades about 0.23 of its potential returns per unit of risk. Needham Aggressive Growth is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,777 in Needham Aggressive Growth on August 24, 2024 and sell it today you would earn a total of 73.00 from holding Needham Aggressive Growth or generate 1.53% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Payden Absolute Return vs. Needham Aggressive Growth
Performance |
| Timeline |
| Payden Absolute Return |
| Needham Aggressive Growth |
Payden Absolute and Needham Aggressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Payden Absolute and Needham Aggressive
The main advantage of trading using opposite Payden Absolute and Needham Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Payden Absolute position performs unexpectedly, Needham Aggressive 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 Aggressive will offset losses from the drop in Needham Aggressive's long position.| Payden Absolute vs. Needham Aggressive Growth | Payden Absolute vs. Lgm Risk Managed | Payden Absolute vs. Ab Global Risk | Payden Absolute vs. Pace High Yield |
| Needham Aggressive vs. Vanguard Small Cap Growth | Needham Aggressive vs. Vanguard Small Cap Growth | Needham Aggressive vs. Vanguard Explorer Fund | Needham Aggressive vs. Vanguard Explorer 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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