Correlation Between Needham Small and Global Alpha
Can any of the company-specific risk be diversified away by investing in both Needham Small and Global Alpha 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 Global Alpha 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 The Global Alpha, you can compare the effects of market volatilities on Needham Small and Global Alpha 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 Global Alpha. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Small and Global Alpha.
Diversification Opportunities for Needham Small and Global Alpha
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Needham and Global is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap and The Global Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Alpha 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 Global Alpha. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Alpha has no effect on the direction of Needham Small i.e., Needham Small and Global Alpha go up and down completely randomly.
Pair Corralation between Needham Small and Global Alpha
Assuming the 90 days horizon Needham Small Cap is expected to generate 2.34 times more return on investment than Global Alpha. However, Needham Small is 2.34 times more volatile than The Global Alpha. It trades about 0.06 of its potential returns per unit of risk. The Global Alpha is currently generating about 0.02 per unit of risk. If you would invest 1,846 in Needham Small Cap on September 4, 2025 and sell it today you would earn a total of 130.00 from holding Needham Small Cap or generate 7.04% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 98.44% |
| Values | Daily Returns |
Needham Small Cap vs. The Global Alpha
Performance |
| Timeline |
| Needham Small Cap |
| Global Alpha |
Needham Small and Global Alpha Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Small and Global Alpha
The main advantage of trading using opposite Needham Small and Global Alpha positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Small position performs unexpectedly, Global Alpha 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 Global Alpha will offset losses from the drop in Global Alpha's long position.| Needham Small vs. Georgia Tax Free Bond | Needham Small vs. Maryland Tax Free Bond | Needham Small vs. Enhanced Fixed Income | Needham Small vs. Federated Municipal High |
| Global Alpha vs. Inflation Adjusted Bond Fund | Global Alpha vs. Simt Multi Asset Inflation | Global Alpha vs. Arrow Managed Futures | Global Alpha vs. Nationwide Inflation Protected Securities |
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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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