Correlation Between Needham Small and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Needham Small and Eaton Vance 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 Small and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Needham Small Cap and Eaton Vance High, you can compare the effects of market volatilities on Needham Small and Eaton Vance 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 Small with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Small and Eaton Vance.
Diversification Opportunities for Needham Small and Eaton Vance
0.21 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Needham and Eaton is 0.21. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap and Eaton Vance High in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance High and Needham Small 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 Small Cap are associated (or correlated) with Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance High has no effect on the direction of Needham Small i.e., Needham Small and Eaton Vance go up and down completely randomly.
Pair Corralation between Needham Small and Eaton Vance
Assuming the 90 days horizon Needham Small Cap is expected to generate 4.83 times more return on investment than Eaton Vance. However, Needham Small is 4.83 times more volatile than Eaton Vance High. It trades about 0.11 of its potential returns per unit of risk. Eaton Vance High is currently generating about -0.04 per unit of risk. If you would invest 1,755 in Needham Small Cap on September 15, 2024 and sell it today you would earn a total of 176.00 from holding Needham Small Cap or generate 10.03% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Very Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Needham Small Cap vs. Eaton Vance High
Performance |
Timeline |
Needham Small Cap |
Eaton Vance High |
Needham Small and Eaton Vance Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Needham Small and Eaton Vance
The main advantage of trading using opposite Needham Small and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Small position performs unexpectedly, Eaton Vance 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 Eaton Vance will offset losses from the drop in Eaton Vance's long position.Needham Small vs. Needham Aggressive Growth | Needham Small vs. Needham Growth Fund | Needham Small vs. Baron Opportunity Fund | Needham Small vs. Aquagold International |
Eaton Vance vs. Needham Small Cap | Eaton Vance vs. Smallcap Growth Fund | Eaton Vance vs. Mutual Of America | Eaton Vance vs. Lebenthal Lisanti Small |
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 USA ETFs module to find actively traded Exchange Traded Funds (ETF) in USA.
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