Correlation Between Needham Aggressive and Aqr Risk-balanced

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

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

Diversification Opportunities for Needham Aggressive and Aqr Risk-balanced

-0.07

Correlation Coefficient

Needham Aggressive  Aqr Risk-balanced

Good diversification

The 3 months correlation between Needham and Aqr is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Aqr Risk Balanced Modities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aqr Risk Balanced and Needham Aggressive 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 Needham Aggressive Growth are associated (or correlated) with Aqr Risk-balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aqr Risk Balanced has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Aqr Risk-balanced go up and down completely randomly.

Pair Corralation between Needham Aggressive and Aqr Risk-balanced

Assuming the 90 days horizon Needham Aggressive Growth is expected to under-perform the Aqr Risk-balanced. In addition to that, Needham Aggressive is 1.81 times more volatile than Aqr Risk Balanced Modities. It trades about -0.1 of its total potential returns per unit of risk. Aqr Risk Balanced Modities is currently generating about 0.11 per unit of volatility. If you would invest  842.00  in Aqr Risk Balanced Modities on December 1, 2024 and sell it today you would earn a total of  45.00  from holding Aqr Risk Balanced Modities or generate 5.34% return on investment over 90 days.

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

Needham Aggressive Growth  vs.  Aqr Risk Balanced Modities

Needham Aggressive Growth

Risk-Adjusted Performance

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 latest weak performance, the Fund's forward indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Aqr Risk Balanced

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Aqr Risk Balanced Modities are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Aqr Risk-balanced is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Needham Aggressive and Aqr Risk-balanced

The main advantage of trading using opposite Needham Aggressive and Aqr Risk-balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive position performs unexpectedly, Aqr Risk-balanced 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 Aqr Risk-balanced will offset losses from the drop in Aqr Risk-balanced's long position.

The idea behind Needham Aggressive Growth and Aqr Risk Balanced Modities 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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.