Correlation Between Needham Aggressive and Brandes Global

Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and Brandes Global 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 Brandes Global 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 Brandes Global Equity, you can compare the effects of market volatilities on Needham Aggressive and Brandes Global 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 Brandes Global. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Brandes Global.

Diversification Opportunities for Needham Aggressive and Brandes Global

-0.46

Correlation Coefficient

Needham Aggressive  Brandes Global

Very good diversification

The 3 months correlation between Needham and Brandes is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Brandes Global Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Brandes Global Equity 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 Brandes Global. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Brandes Global Equity has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Brandes Global go up and down completely randomly.

Pair Corralation between Needham Aggressive and Brandes Global

Assuming the 90 days horizon Needham Aggressive Growth is expected to under-perform the Brandes Global. In addition to that, Needham Aggressive is 2.25 times more volatile than Brandes Global Equity. It trades about -0.07 of its total potential returns per unit of risk. Brandes Global Equity is currently generating about 0.21 per unit of volatility. If you would invest  2,916  in Brandes Global Equity on December 23, 2024 and sell it today you would earn a total of  301.00  from holding Brandes Global Equity or generate 10.32% return on investment over 90 days.

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

Needham Aggressive Growth  vs.  Brandes Global Equity

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.

Brandes Global Equity

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Brandes Global Equity are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Brandes Global may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Needham Aggressive and Brandes Global

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

The idea behind Needham Aggressive Growth and Brandes Global Equity 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 Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.