Correlation Between Intrepid Endurance and Needham Growth

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

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

Diversification Opportunities for Intrepid Endurance and Needham Growth

0.23

Correlation Coefficient

Intrepid Endurance  Needham Growth

Modest diversification

The 3 months correlation between Intrepid and NEEDHAM is 0.23. Overlapping area represents the amount of risk that can be diversified away by holding Intrepid Endurance Fund and Needham Growth Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Growth and Intrepid Endurance 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 Intrepid Endurance 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 Intrepid Endurance i.e., Intrepid Endurance and Needham Growth go up and down completely randomly.

Pair Corralation between Intrepid Endurance and Needham Growth

Assuming the 90 days horizon Intrepid Endurance Fund is expected to generate 0.58 times more return on investment than Needham Growth. However, Intrepid Endurance Fund is 1.72 times less risky than Needham Growth. It trades about 0.04 of its potential returns per unit of risk. Needham Growth Fund is currently generating about -0.02 per unit of risk. If you would invest  1,597  in Intrepid Endurance Fund on September 3, 2024 and sell it today you would earn a total of  28.00  from holding Intrepid Endurance Fund or generate 1.75% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	95.31%
Values	Daily Returns

Intrepid Endurance Fund  vs.  Needham Growth Fund

Intrepid Endurance

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Intrepid Endurance Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Intrepid Endurance 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 Intrepid Endurance and Needham Growth

The main advantage of trading using opposite Intrepid Endurance and Needham Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Intrepid Endurance 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 Intrepid Endurance Fund 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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.