Correlation Between Needham Small and Evaluator Very

Can any of the company-specific risk be diversified away by investing in both Needham Small and Evaluator Very 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 Evaluator Very 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 Evaluator Very Conservative, you can compare the effects of market volatilities on Needham Small and Evaluator Very 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 Evaluator Very. Check out your portfolio center. Please also check ongoing floating volatility patterns of Needham Small and Evaluator Very.

Diversification Opportunities for Needham Small and Evaluator Very

0.96

Correlation Coefficient

Needham Small  Evaluator Very

Almost no diversification

The 3 months correlation between Needham and Evaluator is 0.96. Overlapping area represents the amount of risk that can be diversified away by holding Needham Small Cap and Evaluator Very Conservative in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Evaluator Very Conse 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 Evaluator Very. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Evaluator Very Conse has no effect on the direction of Needham Small i.e., Needham Small and Evaluator Very go up and down completely randomly.

Pair Corralation between Needham Small and Evaluator Very

Assuming the 90 days horizon Needham Small Cap is expected to generate 5.62 times more return on investment than Evaluator Very. However, Needham Small is 5.62 times more volatile than Evaluator Very Conservative. It trades about 0.25 of its potential returns per unit of risk. Evaluator Very Conservative is currently generating about 0.1 per unit of risk. If you would invest  1,470  in Needham Small Cap on April 29, 2025 and sell it today you would earn a total of  389.00  from holding Needham Small Cap or generate 26.46% 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.  Evaluator Very Conservative

Needham Small Cap

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Needham Small Cap are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, Needham Small showed solid returns over the last few months and may actually be approaching a breakup point.

Evaluator Very Conse

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Evaluator Very Conservative are ranked lower than 8 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Evaluator Very is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Needham Small and Evaluator Very

The main advantage of trading using opposite Needham Small and Evaluator Very positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Needham Small position performs unexpectedly, Evaluator Very 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 Evaluator Very will offset losses from the drop in Evaluator Very's long position.

The idea behind Needham Small Cap and Evaluator Very Conservative 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.

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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 Insider Screener module to find insiders across different sectors to evaluate their impact on performance.