Correlation Between Needham Aggressive and Intrepid Endurance

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

Diversification Opportunities for Needham Aggressive and Intrepid Endurance

0.21

Correlation Coefficient

Needham Aggressive  Intrepid Endurance

Modest diversification

The 3 months correlation between Needham and Intrepid is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Intrepid Endurance Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Intrepid Endurance 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 Intrepid Endurance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Intrepid Endurance has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Intrepid Endurance go up and down completely randomly.

Pair Corralation between Needham Aggressive and Intrepid Endurance

Assuming the 90 days horizon Needham Aggressive Growth is expected to generate 1.6 times more return on investment than Intrepid Endurance. However, Needham Aggressive is 1.6 times more volatile than Intrepid Endurance Fund. It trades about 0.11 of its potential returns per unit of risk. Intrepid Endurance Fund is currently generating about 0.04 per unit of risk. If you would invest  4,678  in Needham Aggressive Growth on September 4, 2024 and sell it today you would earn a total of  416.00  from holding Needham Aggressive Growth or generate 8.89% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.24%
Values	Daily Returns

Needham Aggressive Growth  vs.  Intrepid Endurance Fund

Needham Aggressive Growth

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Needham Aggressive Growth are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Needham Aggressive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Intrepid Endurance

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intrepid Endurance Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Intrepid Endurance 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 Intrepid Endurance

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

The idea behind Needham Aggressive Growth and Intrepid Endurance Fund 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.