Correlation Between Needham Aggressive and Vanguard Small-cap
Can any of the company-specific risk be diversified away by investing in both Needham Aggressive and Vanguard Small-cap 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 Vanguard Small-cap 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 Vanguard Small Cap Index, you can compare the effects of market volatilities on Needham Aggressive and Vanguard Small-cap 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 Vanguard Small-cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Aggressive and Vanguard Small-cap.
Diversification Opportunities for Needham Aggressive and Vanguard Small-cap
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Needham and Vanguard is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Needham Aggressive Growth and Vanguard Small Cap Index in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vanguard Small Cap 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 Vanguard Small-cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vanguard Small Cap has no effect on the direction of Needham Aggressive i.e., Needham Aggressive and Vanguard Small-cap go up and down completely randomly.
Pair Corralation between Needham Aggressive and Vanguard Small-cap
Assuming the 90 days horizon Needham Aggressive is expected to generate 1.18 times less return on investment than Vanguard Small-cap. In addition to that, Needham Aggressive is 1.4 times more volatile than Vanguard Small Cap Index. It trades about 0.16 of its total potential returns per unit of risk. Vanguard Small Cap Index is currently generating about 0.27 per unit of volatility. If you would invest 30,635 in Vanguard Small Cap Index on September 6, 2024 and sell it today you would earn a total of 5,221 from holding Vanguard Small Cap Index or generate 17.04% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
Needham Aggressive Growth vs. Vanguard Small Cap Index
Performance |
Timeline |
Needham Aggressive Growth |
Vanguard Small Cap |
Needham Aggressive and Vanguard Small-cap Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Needham Aggressive and Vanguard Small-cap
The main advantage of trading using opposite Needham Aggressive and Vanguard Small-cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Aggressive position performs unexpectedly, Vanguard Small-cap 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 Vanguard Small-cap will offset losses from the drop in Vanguard Small-cap's long position.Needham Aggressive vs. Needham Aggressive Growth | Needham Aggressive vs. Needham Small Cap | Needham Aggressive vs. Ultramid Cap Profund Ultramid Cap | Needham Aggressive vs. Fidelity Advisor Semiconductors |
Vanguard Small-cap vs. Ab Small Cap | Vanguard Small-cap vs. Qs Small Capitalization | Vanguard Small-cap vs. Touchstone Small Cap | Vanguard Small-cap vs. Ancorathelen Small Mid Cap |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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