Correlation Between Needham Small and Global E
Can any of the company-specific risk be diversified away by investing in both Needham Small and Global E 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 E 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 Global E Portfolio, you can compare the effects of market volatilities on Needham Small and Global E 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 E. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Small and Global E.
Diversification Opportunities for Needham Small and Global E
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Needham and Global is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap and Global E Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global E Portfolio 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 E. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global E Portfolio has no effect on the direction of Needham Small i.e., Needham Small and Global E go up and down completely randomly.
Pair Corralation between Needham Small and Global E
Assuming the 90 days horizon Needham Small Cap is expected to generate 2.07 times more return on investment than Global E. However, Needham Small is 2.07 times more volatile than Global E Portfolio. It trades about 0.29 of its potential returns per unit of risk. Global E Portfolio is currently generating about 0.29 per unit of risk. If you would invest 1,443 in Needham Small Cap on April 30, 2025 and sell it today you would earn a total of 443.00 from holding Needham Small Cap or generate 30.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Small Cap vs. Global E Portfolio
Performance |
| Timeline |
| Needham Small Cap |
| Global E Portfolio |
Needham Small and Global E Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Small and Global E
The main advantage of trading using opposite Needham Small and Global E positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Small position performs unexpectedly, Global E 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 E will offset losses from the drop in Global E's long position.| Needham Small vs. Baron Opportunity Fund | Needham Small vs. Jacob Micro Cap | Needham Small vs. Needham Aggressive Growth | Needham Small vs. Needham Growth Fund |
| Global E vs. Pax Large Cap | Global E vs. Vest Large Cap | Global E vs. M Large Cap | Global E vs. Transamerica Large 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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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