Correlation Between Needham Small and Franklin New
Can any of the company-specific risk be diversified away by investing in both Needham Small and Franklin New 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 Small and Franklin New into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Needham Small Cap and Franklin New York, you can compare the effects of market volatilities on Needham Small and Franklin New 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 Small with a short position of Franklin New. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Small and Franklin New.
Diversification Opportunities for Needham Small and Franklin New
0.54 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Needham and Franklin is 0.54. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap and Franklin New York in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin New York and Needham Small 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 Small Cap are associated (or correlated) with Franklin New. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin New York has no effect on the direction of Needham Small i.e., Needham Small and Franklin New go up and down completely randomly.
Pair Corralation between Needham Small and Franklin New
Assuming the 90 days horizon Needham Small Cap is expected to generate 8.69 times more return on investment than Franklin New. However, Needham Small is 8.69 times more volatile than Franklin New York. It trades about 0.03 of its potential returns per unit of risk. Franklin New York is currently generating about 0.04 per unit of risk. If you would invest 1,633 in Needham Small Cap on October 10, 2024 and sell it today you would earn a total of 287.00 from holding Needham Small Cap or generate 17.58% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Needham Small Cap vs. Franklin New York
Performance |
Timeline |
Needham Small Cap |
Franklin New York |
Needham Small and Franklin New Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Needham Small and Franklin New
The main advantage of trading using opposite Needham Small and Franklin New positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Small position performs unexpectedly, Franklin New 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 Franklin New will offset losses from the drop in Franklin New's long position.Needham Small vs. Needham Aggressive Growth | Needham Small vs. Needham Growth Fund | Needham Small vs. Jacob Micro Cap |
Franklin New vs. Ab Small Cap | Franklin New vs. Touchstone Small Cap | Franklin New vs. Vy Columbia Small | Franklin New vs. Needham Small Cap |
Check out your portfolio center.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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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