Correlation Between Needham Small and Principal Lifetime
Can any of the company-specific risk be diversified away by investing in both Needham Small and Principal Lifetime 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 Principal Lifetime 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 Principal Lifetime Hybrid, you can compare the effects of market volatilities on Needham Small and Principal Lifetime 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 Principal Lifetime. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Small and Principal Lifetime.
Diversification Opportunities for Needham Small and Principal Lifetime
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Needham and Principal is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap and Principal Lifetime Hybrid in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Principal Lifetime Hybrid 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 Principal Lifetime. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Principal Lifetime Hybrid has no effect on the direction of Needham Small i.e., Needham Small and Principal Lifetime go up and down completely randomly.
Pair Corralation between Needham Small and Principal Lifetime
Assuming the 90 days horizon Needham Small Cap is expected to generate 4.74 times more return on investment than Principal Lifetime. However, Needham Small is 4.74 times more volatile than Principal Lifetime Hybrid. It trades about 0.14 of its potential returns per unit of risk. Principal Lifetime Hybrid is currently generating about 0.24 per unit of risk. If you would invest 1,642 in Needham Small Cap on May 27, 2025 and sell it today you would earn a total of 243.00 from holding Needham Small Cap or generate 14.8% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Needham Small Cap vs. Principal Lifetime Hybrid
Performance |
| Timeline |
| Needham Small Cap |
| Principal Lifetime Hybrid |
Needham Small and Principal Lifetime Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Needham Small and Principal Lifetime
The main advantage of trading using opposite Needham Small and Principal Lifetime positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Small position performs unexpectedly, Principal Lifetime 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 Principal Lifetime will offset losses from the drop in Principal Lifetime'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 |
| Principal Lifetime vs. Elfun Diversified Fund | Principal Lifetime vs. Northern Small Cap | Principal Lifetime vs. Aqr Diversified Arbitrage | Principal Lifetime vs. Stone Ridge Diversified |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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