Correlation Between Copeland Risk and Needham Aggressive

Can any of the company-specific risk be diversified away by investing in both Copeland Risk 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 Copeland Risk and Needham Aggressive into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Copeland Risk Managed and Needham Aggressive Growth, you can compare the effects of market volatilities on Copeland Risk 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 Copeland Risk with a short position of Needham Aggressive. Check out your portfolio center. Please also check ongoing floating volatility patterns of Copeland Risk and Needham Aggressive.

Diversification Opportunities for Copeland Risk and Needham Aggressive

-0.09

Correlation Coefficient

Copeland Risk  Needham Aggressive

Good diversification

The 3 months correlation between Copeland and Needham is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Copeland Risk Managed 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 Copeland Risk 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 Copeland Risk Managed 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 Copeland Risk i.e., Copeland Risk and Needham Aggressive go up and down completely randomly.

Pair Corralation between Copeland Risk and Needham Aggressive

Assuming the 90 days horizon Copeland Risk is expected to generate 4.44 times less return on investment than Needham Aggressive. But when comparing it to its historical volatility, Copeland Risk Managed is 1.26 times less risky than Needham Aggressive. It trades about 0.02 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  3,048  in Needham Aggressive Growth on September 24, 2024 and sell it today you would earn a total of  1,852  from holding Needham Aggressive Growth or generate 60.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Copeland Risk Managed  vs.  Needham Aggressive Growth

Copeland Risk Managed

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Copeland Risk Managed has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's basic indicators remain fairly strong which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

Needham Aggressive Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Needham Aggressive Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Needham Aggressive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Copeland Risk and Needham Aggressive

The main advantage of trading using opposite Copeland Risk and Needham Aggressive positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Copeland Risk 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.

The idea behind Copeland Risk Managed and Needham Aggressive Growth pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.