Correlation Between Needham Small and Oklahoma College

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

Diversification Opportunities for Needham Small and Oklahoma College

0.74

Correlation Coefficient

Needham Small  Oklahoma College

Poor diversification

The 3 months correlation between Needham and Oklahoma is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap and Oklahoma College Savings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oklahoma College Savings 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 Oklahoma College. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oklahoma College Savings has no effect on the direction of Needham Small i.e., Needham Small and Oklahoma College go up and down completely randomly.

Pair Corralation between Needham Small and Oklahoma College

Assuming the 90 days horizon Needham Small is expected to generate 3.63 times less return on investment than Oklahoma College. In addition to that, Needham Small is 1.32 times more volatile than Oklahoma College Savings. It trades about 0.03 of its total potential returns per unit of risk. Oklahoma College Savings is currently generating about 0.12 per unit of volatility. If you would invest  842.00  in Oklahoma College Savings on September 28, 2024 and sell it today you would earn a total of  877.00  from holding Oklahoma College Savings or generate 104.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	99.8%
Values	Daily Returns

Needham Small Cap  vs.  Oklahoma College Savings

Needham Small Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Needham Small Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Needham Small is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Oklahoma College Savings

Risk-Adjusted Performance

12 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Oklahoma College Savings are ranked lower than 12 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Oklahoma College may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Needham Small and Oklahoma College

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

The idea behind Needham Small Cap and Oklahoma College Savings 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.