Correlation Between Shelton Emerging and Short-term Fund

Can any of the company-specific risk be diversified away by investing in both Shelton Emerging and Short-term Fund 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 Shelton Emerging and Short-term Fund into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shelton Emerging Markets and Short Term Fund C, you can compare the effects of market volatilities on Shelton Emerging and Short-term Fund 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 Shelton Emerging with a short position of Short-term Fund. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shelton Emerging and Short-term Fund.

Diversification Opportunities for Shelton Emerging and Short-term Fund

0.04

Correlation Coefficient

Shelton Emerging  Short-term Fund

Significant diversification

The 3 months correlation between Shelton and Short-term is 0.04. Overlapping area represents the amount of risk that can be diversified away by holding Shelton Emerging Markets and Short Term Fund C in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Short Term Fund and Shelton Emerging 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 Shelton Emerging Markets are associated (or correlated) with Short-term Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Short Term Fund has no effect on the direction of Shelton Emerging i.e., Shelton Emerging and Short-term Fund go up and down completely randomly.

Pair Corralation between Shelton Emerging and Short-term Fund

Assuming the 90 days horizon Shelton Emerging is expected to generate 1.28 times less return on investment than Short-term Fund. In addition to that, Shelton Emerging is 11.08 times more volatile than Short Term Fund C. It trades about 0.02 of its total potential returns per unit of risk. Short Term Fund C is currently generating about 0.25 per unit of volatility. If you would invest  869.00  in Short Term Fund C on September 5, 2024 and sell it today you would earn a total of  98.00  from holding Short Term Fund C or generate 11.28% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	99.8%
Values	Daily Returns

Shelton Emerging Markets  vs.  Short Term Fund C

Shelton Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shelton Emerging Markets has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong essential indicators, Shelton Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Short Term Fund

Risk-Adjusted Performance

17 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Short Term Fund C are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong fundamental indicators, Short-term Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shelton Emerging and Short-term Fund

The main advantage of trading using opposite Shelton Emerging and Short-term Fund positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelton Emerging position performs unexpectedly, Short-term Fund 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 Short-term Fund will offset losses from the drop in Short-term Fund's long position.

The idea behind Shelton Emerging Markets and Short Term Fund C 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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.