Correlation Between Vanguard Small-cap and Needham Aggressive
Can any of the company-specific risk be diversified away by investing in both Vanguard Small-cap 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 Vanguard Small-cap and Needham Aggressive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Vanguard Small Cap Growth and Needham Aggressive Growth, you can compare the effects of market volatilities on Vanguard Small-cap 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 Vanguard Small-cap with a short position of Needham Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Vanguard Small-cap and Needham Aggressive.
Diversification Opportunities for Vanguard Small-cap and Needham Aggressive
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Vanguard and Needham is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding Vanguard Small Cap Growth 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 Vanguard Small-cap 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 Vanguard Small Cap Growth 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 Vanguard Small-cap i.e., Vanguard Small-cap and Needham Aggressive go up and down completely randomly.
Pair Corralation between Vanguard Small-cap and Needham Aggressive
Assuming the 90 days horizon Vanguard Small Cap Growth is expected to generate 0.63 times more return on investment than Needham Aggressive. However, Vanguard Small Cap Growth is 1.58 times less risky than Needham Aggressive. It trades about 0.19 of its potential returns per unit of risk. Needham Aggressive Growth is currently generating about 0.09 per unit of risk. If you would invest 7,902 in Vanguard Small Cap Growth on November 3, 2024 and sell it today you would earn a total of 315.00 from holding Vanguard Small Cap Growth or generate 3.99% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Vanguard Small Cap Growth vs. Needham Aggressive Growth
Performance |
| Timeline |
| Vanguard Small Cap |
| Needham Aggressive Growth |
Vanguard Small-cap and Needham Aggressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Vanguard Small-cap and Needham Aggressive
The main advantage of trading using opposite Vanguard Small-cap and Needham Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Vanguard Small-cap 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.| Vanguard Small-cap vs. Tiaa Cref Inflation Linked Bond | Vanguard Small-cap vs. Cref Inflation Linked Bond | Vanguard Small-cap vs. Abbey Capital Futures | Vanguard Small-cap vs. Simt Multi Asset Inflation |
| Needham Aggressive vs. Needham Aggressive Growth | Needham Aggressive vs. Needham Small Cap | Needham Aggressive vs. Ultramid Cap Profund Ultramid Cap | Needham Aggressive vs. Fidelity Advisor Semiconductors |
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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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