Correlation Between Needham Aggressive and Goldman Sachs

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

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

Diversification Opportunities for Needham Aggressive and Goldman Sachs

0.32

Correlation Coefficient

Needham Aggressive  Goldman Sachs

Weak diversification

The 3 months correlation between Needham and Goldman is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Goldman Sachs Short in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Short and Needham Aggressive 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 Aggressive Growth are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Short has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Goldman Sachs go up and down completely randomly.

Pair Corralation between Needham Aggressive and Goldman Sachs

Assuming the 90 days horizon Needham Aggressive Growth is expected to generate 11.06 times more return on investment than Goldman Sachs. However, Needham Aggressive is 11.06 times more volatile than Goldman Sachs Short. It trades about 0.1 of its potential returns per unit of risk. Goldman Sachs Short is currently generating about -0.03 per unit of risk. If you would invest  4,737  in Needham Aggressive Growth on September 16, 2024 and sell it today you would earn a total of  374.00  from holding Needham Aggressive Growth or generate 7.9% return on investment over 90 days.

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

Needham Aggressive Growth  vs.  Goldman Sachs Short

Needham Aggressive Growth

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Needham Aggressive Growth are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Needham Aggressive may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Goldman Sachs Short

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Goldman Sachs Short has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Goldman Sachs 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 Aggressive and Goldman Sachs

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

The idea behind Needham Aggressive Growth and Goldman Sachs Short 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 Latest Portfolios module to quick portfolio dashboard that showcases your latest portfolios.