Correlation Between Needham Small and Rivernorth Equity

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

Diversification Opportunities for Needham Small and Rivernorth Equity

0.0

Correlation Coefficient

Needham Small  Rivernorth Equity

Pay attention - limited upside

The 3 months correlation between Needham and Rivernorth is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap and Rivernorth Equity Opportunity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Rivernorth Equity 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 Rivernorth Equity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Rivernorth Equity has no effect on the direction of Needham Small i.e., Needham Small and Rivernorth Equity go up and down completely randomly.

Pair Corralation between Needham Small and Rivernorth Equity

If you would invest  1,887  in Needham Small Cap on September 27, 2024 and sell it today you would earn a total of  17.00  from holding Needham Small Cap or generate 0.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	0.0%
Values	Daily Returns

Needham Small Cap  vs.  Rivernorth Equity Opportunity

Needham Small Cap

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Needham Small Cap are ranked lower than 1 (%) 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.

Rivernorth Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Rivernorth Equity Opportunity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Rivernorth Equity 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 Small and Rivernorth Equity

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

The idea behind Needham Small Cap and Rivernorth Equity Opportunity 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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.