Correlation Between Needham Aggressive and Huber Capital

Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and Huber Capital 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 Huber Capital 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 Huber Capital Small, you can compare the effects of market volatilities on Needham Aggressive and Huber Capital 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 Huber Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Huber Capital.

Diversification Opportunities for Needham Aggressive and Huber Capital

0.65

Correlation Coefficient

Needham Aggressive  Huber Capital

Poor diversification

The 3 months correlation between Needham and Huber is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Huber Capital Small in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huber Capital Small 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 Huber Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huber Capital Small has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Huber Capital go up and down completely randomly.

Pair Corralation between Needham Aggressive and Huber Capital

Assuming the 90 days horizon Needham Aggressive is expected to generate 5.37 times less return on investment than Huber Capital. But when comparing it to its historical volatility, Needham Aggressive Growth is 1.02 times less risky than Huber Capital. It trades about 0.01 of its potential returns per unit of risk. Huber Capital Small is currently generating about 0.03 of returns per unit of risk over similar time horizon. If you would invest  2,764  in Huber Capital Small on September 21, 2024 and sell it today you would earn a total of  63.00  from holding Huber Capital Small or generate 2.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.44%
Values	Daily Returns

Needham Aggressive Growth  vs.  Huber Capital Small

Needham Aggressive Growth

Risk-Adjusted Performance

0 of 100

Weak

Over the last 90 days Needham Aggressive Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong forward indicators, Needham Aggressive is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Huber Capital Small

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Huber Capital Small are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Huber Capital 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 Huber Capital

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

The idea behind Needham Aggressive Growth and Huber Capital Small 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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.