Correlation Between Astor Star and Needham Growth

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

By analyzing existing cross correlation between Astor Star Fund and Needham Growth, you can compare the effects of market volatilities on Astor Star and Needham Growth 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 Astor Star with a short position of Needham Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Astor Star and Needham Growth.

Diversification Opportunities for Astor Star and Needham Growth

0.13

Correlation Coefficient

Astor Star  Needham Growth

Average diversification

The 3 months correlation between Astor and Needham is 0.13. Overlapping area represents the amount of risk that can be diversified away by holding Astor Star Fund and Needham Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Growth and Astor Star 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 Astor Star Fund are associated (or correlated) with Needham Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Growth has no effect on the direction of Astor Star i.e., Astor Star and Needham Growth go up and down completely randomly.

Pair Corralation between Astor Star and Needham Growth

Assuming the 90 days horizon Astor Star Fund is expected to generate 0.56 times more return on investment than Needham Growth. However, Astor Star Fund is 1.78 times less risky than Needham Growth. It trades about 0.02 of its potential returns per unit of risk. Needham Growth is currently generating about -0.03 per unit of risk. If you would invest  1,594  in Astor Star Fund on October 22, 2024 and sell it today you would earn a total of  14.00  from holding Astor Star Fund or generate 0.88% return on investment over 90 days.

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

Astor Star Fund  vs.  Needham Growth

Astor Star Fund

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Astor Star Fund are ranked lower than 1 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Astor Star is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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 fairly strong forward indicators, Needham Growth is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Astor Star and Needham Growth

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

The idea behind Astor Star Fund and Needham Growth 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 Efficient Frontier module to plot and analyze your portfolio and positions against risk-return landscape of the market..