Correlation Between Needham Aggressive and Hartford Growth

Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and Hartford 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 Needham Aggressive and Hartford Growth 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 The Hartford Growth, you can compare the effects of market volatilities on Needham Aggressive and Hartford 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 Needham Aggressive with a short position of Hartford Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Hartford Growth.

Diversification Opportunities for Needham Aggressive and Hartford Growth

0.49

Correlation Coefficient

Needham Aggressive  Hartford Growth

Very weak diversification

The 3 months correlation between Needham and Hartford is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and The Hartford Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hartford Growth 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 Hartford Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hartford Growth has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Hartford Growth go up and down completely randomly.

Pair Corralation between Needham Aggressive and Hartford Growth

Assuming the 90 days horizon Needham Aggressive is expected to generate 1.45 times less return on investment than Hartford Growth. In addition to that, Needham Aggressive is 1.36 times more volatile than The Hartford Growth. It trades about 0.11 of its total potential returns per unit of risk. The Hartford Growth is currently generating about 0.23 per unit of volatility. If you would invest  5,149  in The Hartford Growth on September 12, 2024 and sell it today you would earn a total of  755.00  from holding The Hartford Growth or generate 14.66% return on investment over 90 days.

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

Needham Aggressive Growth  vs.  The Hartford Growth

Needham Aggressive Growth

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Needham Aggressive Growth are ranked lower than 9 (%) 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.

Hartford Growth

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in The Hartford Growth are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Hartford Growth showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Needham Aggressive and Hartford Growth

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

The idea behind Needham Aggressive Growth and The Hartford 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.

Check out your portfolio center.

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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.