Correlation Between 70082LAB3 and Needham Growth

Can any of the company-specific risk be diversified away by investing in both 70082LAB3 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 70082LAB3 and Needham Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between US70082LAB36 and Needham Growth Fund, you can compare the effects of market volatilities on 70082LAB3 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 70082LAB3 with a short position of Needham Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of 70082LAB3 and Needham Growth.

Diversification Opportunities for 70082LAB3 and Needham Growth

-0.68

Correlation Coefficient

70082LAB3  Needham Growth

Excellent diversification

The 3 months correlation between 70082LAB3 and Needham is -0.68. Overlapping area represents the amount of risk that can be diversified away by holding US70082LAB36 and Needham Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Growth and 70082LAB3 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 US70082LAB36 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 70082LAB3 i.e., 70082LAB3 and Needham Growth go up and down completely randomly.

Pair Corralation between 70082LAB3 and Needham Growth

Assuming the 90 days trading horizon US70082LAB36 is expected to generate 43.61 times more return on investment than Needham Growth. However, 70082LAB3 is 43.61 times more volatile than Needham Growth Fund. It trades about 0.06 of its potential returns per unit of risk. Needham Growth Fund is currently generating about 0.06 per unit of risk. If you would invest  7,050  in US70082LAB36 on September 19, 2024 and sell it today you would earn a total of  1,875  from holding US70082LAB36 or generate 26.6% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Weak
Accuracy	44.15%
Values	Daily Returns

US70082LAB36  vs.  Needham Growth Fund

US70082LAB36

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in US70082LAB36 are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite somewhat strong basic indicators, 70082LAB3 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 Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental 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 70082LAB3 and Needham Growth

The main advantage of trading using opposite 70082LAB3 and Needham Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if 70082LAB3 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 US70082LAB36 and Needham Growth 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.