Correlation Between State Street and Needham Aggressive
Can any of the company-specific risk be diversified away by investing in both State Street 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 State Street and Needham Aggressive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between State Street Target and Needham Aggressive Growth, you can compare the effects of market volatilities on State Street 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 State Street with a short position of Needham Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of State Street and Needham Aggressive.
Diversification Opportunities for State Street and Needham Aggressive
0.64 | Correlation Coefficient |
Poor diversification
The 3 months correlation between State and Needham is 0.64. Overlapping area represents the amount of risk that can be diversified away by holding State Street Target 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 State Street 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 State Street Target 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 State Street i.e., State Street and Needham Aggressive go up and down completely randomly.
Pair Corralation between State Street and Needham Aggressive
Assuming the 90 days horizon State Street is expected to generate 2.95 times less return on investment than Needham Aggressive. But when comparing it to its historical volatility, State Street Target is 3.56 times less risky than Needham Aggressive. It trades about 0.1 of its potential returns per unit of risk. Needham Aggressive Growth is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 3,115 in Needham Aggressive Growth on August 30, 2024 and sell it today you would earn a total of 2,025 from holding Needham Aggressive Growth or generate 65.01% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
State Street Target vs. Needham Aggressive Growth
Performance |
| Timeline |
| State Street Target |
| Needham Aggressive Growth |
State Street and Needham Aggressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with State Street and Needham Aggressive
The main advantage of trading using opposite State Street and Needham Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if State Street 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.| State Street vs. Fidelity Freedom Index | State Street vs. Fidelity Freedom Index | State Street vs. Fidelity Freedom Index | State Street vs. ABIVAX Socit Anonyme |
| Needham Aggressive vs. Putnam Equity Income | Needham Aggressive vs. Putnam Growth Opportunities | Needham Aggressive vs. HUMANA INC | Needham Aggressive vs. Aquagold International |
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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.
Other Complementary Tools
| Positions Ratings 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 | |
| Piotroski F Score Get Piotroski F Score based on the binary analysis strategy of nine different fundamentals | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm |