Correlation Between Needham Growth and Calvert Moderate

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

By analyzing existing cross correlation between Needham Growth and Calvert Moderate Allocation, you can compare the effects of market volatilities on Needham Growth and Calvert Moderate 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 Calvert Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Growth and Calvert Moderate.

Diversification Opportunities for Needham Growth and Calvert Moderate

0.43

Correlation Coefficient

Needham Growth  Calvert Moderate

Very weak diversification

The 3 months correlation between Needham and Calvert is 0.43. Overlapping area represents the amount of risk that can be diversified away by holding Needham Growth and Calvert Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Moderate All 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 are associated (or correlated) with Calvert Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Moderate All has no effect on the direction of Needham Growth i.e., Needham Growth and Calvert Moderate go up and down completely randomly.

Pair Corralation between Needham Growth and Calvert Moderate

Assuming the 90 days horizon Needham Growth is expected to under-perform the Calvert Moderate. In addition to that, Needham Growth is 1.68 times more volatile than Calvert Moderate Allocation. It trades about -0.19 of its total potential returns per unit of risk. Calvert Moderate Allocation is currently generating about -0.32 per unit of volatility. If you would invest  2,137  in Calvert Moderate Allocation on October 8, 2024 and sell it today you would lose (97.00) from holding Calvert Moderate Allocation or give up 4.54% of portfolio value over 90 days.

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

Needham Growth  vs.  Calvert Moderate Allocation

Needham Growth

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Needham 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.

Calvert Moderate All

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Calvert Moderate Allocation has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Calvert Moderate 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 Calvert Moderate

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

The idea behind Needham Growth and Calvert Moderate Allocation 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.