Correlation Between Shelton Emerging and American Funds
Can any of the company-specific risk be diversified away by investing in both Shelton Emerging and American Funds 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 American Funds 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 American Funds 2040, you can compare the effects of market volatilities on Shelton Emerging and American Funds 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 American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shelton Emerging and American Funds.
Diversification Opportunities for Shelton Emerging and American Funds
0.63 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shelton and American is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Shelton Emerging Markets and American Funds 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2040 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 American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds 2040 has no effect on the direction of Shelton Emerging i.e., Shelton Emerging and American Funds go up and down completely randomly.
Pair Corralation between Shelton Emerging and American Funds
Assuming the 90 days horizon Shelton Emerging Markets is expected to under-perform the American Funds. In addition to that, Shelton Emerging is 1.39 times more volatile than American Funds 2040. It trades about -0.23 of its total potential returns per unit of risk. American Funds 2040 is currently generating about 0.1 per unit of volatility. If you would invest 2,125 in American Funds 2040 on August 29, 2024 and sell it today you would earn a total of 28.00 from holding American Funds 2040 or generate 1.32% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shelton Emerging Markets vs. American Funds 2040
Performance |
| Timeline |
| Shelton Emerging Markets |
| American Funds 2040 |
Shelton Emerging and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shelton Emerging and American Funds
The main advantage of trading using opposite Shelton Emerging and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelton Emerging position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Shelton Emerging vs. Wcm Focused Emerging | Shelton Emerging vs. Balter Invenomic Fund | Shelton Emerging vs. California Tax Free Income | Shelton Emerging vs. Shelton Funds |
| American Funds vs. Balanced Fund Investor | American Funds vs. Materials Portfolio Fidelity | American Funds vs. Eic Value Fund | American Funds vs. Ab Global Risk |
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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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