Correlation Between Needham Aggressive and Pimco Commoditiesplus

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

Diversification Opportunities for Needham Aggressive and Pimco Commoditiesplus

0.56

Correlation Coefficient

Needham Aggressive  Pimco Commoditiesplus

Very weak diversification

The 3 months correlation between Needham and Pimco is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Pimco Moditiesplus Strategy in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Commoditiesplus 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 Pimco Commoditiesplus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Commoditiesplus has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Pimco Commoditiesplus go up and down completely randomly.

Pair Corralation between Needham Aggressive and Pimco Commoditiesplus

Assuming the 90 days horizon Needham Aggressive Growth is expected to under-perform the Pimco Commoditiesplus. In addition to that, Needham Aggressive is 2.58 times more volatile than Pimco Moditiesplus Strategy. It trades about -0.08 of its total potential returns per unit of risk. Pimco Moditiesplus Strategy is currently generating about 0.08 per unit of volatility. If you would invest  618.00  in Pimco Moditiesplus Strategy on December 28, 2024 and sell it today you would earn a total of  21.00  from holding Pimco Moditiesplus Strategy or generate 3.4% return on investment over 90 days.

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

Needham Aggressive Growth  vs.  Pimco Moditiesplus Strategy

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.

Pimco Commoditiesplus

Risk-Adjusted Performance

Modest

Over the last 90 days Pimco Moditiesplus Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Pimco Commoditiesplus 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 Pimco Commoditiesplus

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

The idea behind Needham Aggressive Growth and Pimco Moditiesplus Strategy 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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.