Correlation Between Wasatch Micro and Needham Aggressive
Can any of the company-specific risk be diversified away by investing in both Wasatch Micro 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 Wasatch Micro and Needham Aggressive into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Wasatch Micro Cap and Needham Aggressive Growth, you can compare the effects of market volatilities on Wasatch Micro 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 Wasatch Micro with a short position of Needham Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Wasatch Micro and Needham Aggressive.
Diversification Opportunities for Wasatch Micro and Needham Aggressive
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Wasatch and Needham is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Wasatch Micro Cap 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 Wasatch Micro 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 Wasatch Micro Cap 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 Wasatch Micro i.e., Wasatch Micro and Needham Aggressive go up and down completely randomly.
Pair Corralation between Wasatch Micro and Needham Aggressive
Assuming the 90 days horizon Wasatch Micro Cap is expected to generate 0.89 times more return on investment than Needham Aggressive. However, Wasatch Micro Cap is 1.13 times less risky than Needham Aggressive. It trades about 0.08 of its potential returns per unit of risk. Needham Aggressive Growth is currently generating about 0.06 per unit of risk. If you would invest 328.00 in Wasatch Micro Cap on September 12, 2024 and sell it today you would earn a total of 115.00 from holding Wasatch Micro Cap or generate 35.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Wasatch Micro Cap vs. Needham Aggressive Growth
Performance |
| Timeline |
| Wasatch Micro Cap |
| Needham Aggressive Growth |
Wasatch Micro and Needham Aggressive Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Wasatch Micro and Needham Aggressive
The main advantage of trading using opposite Wasatch Micro and Needham Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Wasatch Micro 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.| Wasatch Micro vs. Needham Aggressive Growth | Wasatch Micro vs. Ultramid Cap Profund Ultramid Cap | Wasatch Micro vs. HUMANA INC | Wasatch Micro vs. Barloworld Ltd ADR |
| Needham Aggressive vs. Ultramid Cap Profund Ultramid Cap | Needham Aggressive vs. HUMANA INC | Needham Aggressive vs. Barloworld Ltd ADR | Needham Aggressive vs. Morningstar Unconstrained Allocation |
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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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