Correlation Between Needham Small and Maingate Mlp

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

Diversification Opportunities for Needham Small and Maingate Mlp

0.67

Correlation Coefficient

Needham Small  Maingate Mlp

Poor diversification

The 3 months correlation between Needham and Maingate is 0.67. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap and Maingate Mlp Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Maingate Mlp 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 Maingate Mlp. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Maingate Mlp has no effect on the direction of Needham Small i.e., Needham Small and Maingate Mlp go up and down completely randomly.

Pair Corralation between Needham Small and Maingate Mlp

Assuming the 90 days horizon Needham Small is expected to generate 2.05 times less return on investment than Maingate Mlp. In addition to that, Needham Small is 1.56 times more volatile than Maingate Mlp Fund. It trades about 0.17 of its total potential returns per unit of risk. Maingate Mlp Fund is currently generating about 0.55 per unit of volatility. If you would invest  863.00  in Maingate Mlp Fund on October 22, 2024 and sell it today you would earn a total of  76.00  from holding Maingate Mlp Fund or generate 8.81% return on investment over 90 days.

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

Needham Small Cap  vs.  Maingate Mlp Fund

Needham Small Cap

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Needham Small Cap are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Needham Small may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Maingate Mlp

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Maingate Mlp Fund are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Maingate Mlp showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Needham Small and Maingate Mlp

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

The idea behind Needham Small Cap and Maingate Mlp 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 Stocks Directory module to find actively traded stocks across global markets.