Correlation Between Ultramid-cap Profund and Needham Aggressive

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

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

Diversification Opportunities for Ultramid-cap Profund and Needham Aggressive

0.7

Correlation Coefficient

Ultramid-cap Profund  Needham Aggressive

Poor diversification

The 3 months correlation between Ultramid-cap and Needham is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Ultramid Cap Profund Ultramid and Needham Aggressive Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Aggressive Growth and Ultramid-cap Profund 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 Ultramid Cap Profund Ultramid Cap are associated (or correlated) with Needham Aggressive. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Aggressive Growth has no effect on the direction of Ultramid-cap Profund i.e., Ultramid-cap Profund and Needham Aggressive go up and down completely randomly.

Pair Corralation between Ultramid-cap Profund and Needham Aggressive

Assuming the 90 days horizon Ultramid Cap Profund Ultramid Cap is expected to under-perform the Needham Aggressive. In addition to that, Ultramid-cap Profund is 1.38 times more volatile than Needham Aggressive Growth. It trades about -0.22 of its total potential returns per unit of risk. Needham Aggressive Growth is currently generating about -0.07 per unit of volatility. If you would invest  5,165  in Needham Aggressive Growth on March 16, 2024 and sell it today you would lose (88.00) from holding Needham Aggressive Growth or give up 1.7% of portfolio value over 90 days.

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

Ultramid Cap Profund Ultramid   vs.  Needham Aggressive Growth

Ultramid Cap Profund

Risk-Adjusted Performance

0 of 100

Very Weak

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

Needham Aggressive Growth

Risk-Adjusted Performance

4 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Needham Aggressive Growth are ranked lower than 4 (%) of all funds and portfolios of funds over the last 90 days. 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.

Pair Trading with Ultramid-cap Profund and Needham Aggressive

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

The idea behind Ultramid Cap Profund Ultramid Cap and Needham Aggressive 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.

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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 Portfolio Anywhere module to track or share privately all of your investments from the convenience of any device.