Correlation Between Fidelity International and Needham Small
Can any of the company-specific risk be diversified away by investing in both Fidelity International and Needham Small 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 Fidelity International and Needham Small into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Fidelity International Small and Needham Small Cap, you can compare the effects of market volatilities on Fidelity International and Needham Small 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 Fidelity International with a short position of Needham Small. Check out your portfolio center. Please also check ongoing floating volatility patterns of Fidelity International and Needham Small.
Diversification Opportunities for Fidelity International and Needham Small
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Fidelity and Needham is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Fidelity International Small and Needham Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Small Cap and Fidelity International 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 Fidelity International Small are associated (or correlated) with Needham Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Small Cap has no effect on the direction of Fidelity International i.e., Fidelity International and Needham Small go up and down completely randomly.
Pair Corralation between Fidelity International and Needham Small
Assuming the 90 days horizon Fidelity International is expected to generate 2.48 times less return on investment than Needham Small. But when comparing it to its historical volatility, Fidelity International Small is 2.87 times less risky than Needham Small. It trades about 0.17 of its potential returns per unit of risk. Needham Small Cap is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 1,740 in Needham Small Cap on May 28, 2025 and sell it today you would earn a total of 262.00 from holding Needham Small Cap or generate 15.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Fidelity International Small vs. Needham Small Cap
Performance |
| Timeline |
| Fidelity International |
| Needham Small Cap |
Fidelity International and Needham Small Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Fidelity International and Needham Small
The main advantage of trading using opposite Fidelity International and Needham Small positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Fidelity International position performs unexpectedly, Needham Small 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 Small will offset losses from the drop in Needham Small's long position.The idea behind Fidelity International Small and Needham Small Cap 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.
| Needham Small vs. Needham Small Cap | Needham Small vs. Needham Aggressive Growth | Needham Small vs. Needham Aggressive Growth | Needham Small vs. Ultramid Cap Profund Ultramid 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 Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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