Correlation Between Prudential California and Needham Growth
Can any of the company-specific risk be diversified away by investing in both Prudential California and Needham Growth 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 Prudential California and Needham Growth into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Prudential California Muni and Needham Growth, you can compare the effects of market volatilities on Prudential California and Needham Growth 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 Prudential California with a short position of Needham Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of Prudential California and Needham Growth.
Diversification Opportunities for Prudential California and Needham Growth
0.18 | Correlation Coefficient |
Average diversification
The 3 months correlation between Prudential and Needham is 0.18. Overlapping area represents the amount of risk that can be diversified away by holding Prudential California Muni and Needham Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Needham Growth and Prudential California 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 Prudential California Muni are associated (or correlated) with Needham Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Needham Growth has no effect on the direction of Prudential California i.e., Prudential California and Needham Growth go up and down completely randomly.
Pair Corralation between Prudential California and Needham Growth
Assuming the 90 days horizon Prudential California is expected to generate 2.48 times less return on investment than Needham Growth. But when comparing it to its historical volatility, Prudential California Muni is 12.22 times less risky than Needham Growth. It trades about 0.34 of its potential returns per unit of risk. Needham Growth is currently generating about 0.07 of returns per unit of risk over similar time horizon. If you would invest 5,849 in Needham Growth on June 11, 2025 and sell it today you would earn a total of 303.00 from holding Needham Growth or generate 5.18% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Prudential California Muni vs. Needham Growth
Performance |
| Timeline |
| Prudential California |
| Needham Growth |
Prudential California and Needham Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Prudential California and Needham Growth
The main advantage of trading using opposite Prudential California and Needham Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Prudential California position performs unexpectedly, Needham Growth 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 Growth will offset losses from the drop in Needham Growth's long position.| Prudential California vs. Profunds Large Cap Growth | Prudential California vs. Aqr Large Cap | Prudential California vs. Dunham Large Cap | Prudential California vs. Nuveen Large Cap |
| Needham Growth vs. Rbc Short Duration | Needham Growth vs. Fisher Fixed Income | Needham Growth vs. Ms Global Fixed | Needham Growth vs. Qs 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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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