Correlation Between Needham Growth and Intrepid Endurance

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

Diversification Opportunities for Needham Growth and Intrepid Endurance

-0.07

Correlation Coefficient

Needham Growth  Intrepid Endurance

Good diversification

The 3 months correlation between Needham and Intrepid is -0.07. Overlapping area represents the amount of risk that can be diversified away by holding Needham Growth Fund 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 Growth 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 Growth Fund 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 Growth i.e., Needham Growth and Intrepid Endurance go up and down completely randomly.

Pair Corralation between Needham Growth and Intrepid Endurance

Assuming the 90 days horizon Needham Growth Fund is expected to under-perform the Intrepid Endurance. In addition to that, Needham Growth is 1.88 times more volatile than Intrepid Endurance Fund. It trades about -0.02 of its total potential returns per unit of risk. Intrepid Endurance Fund is currently generating about 0.02 per unit of volatility. If you would invest  1,612  in Intrepid Endurance Fund on September 13, 2024 and sell it today you would earn a total of  13.00  from holding Intrepid Endurance Fund or generate 0.81% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	84.13%
Values	Daily Returns

Needham Growth Fund  vs.  Intrepid Endurance Fund

Needham Growth

Risk-Adjusted Performance

0 of 100

Very Weak

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

Intrepid Endurance

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Intrepid Endurance Fund has generated negative risk-adjusted returns adding no value to fund investors. 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 Growth and Intrepid Endurance

The main advantage of trading using opposite Needham Growth and Intrepid Endurance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Growth 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 Growth Fund 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 Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.