Correlation Between Shelton Emerging and Calvert Developed
Can any of the company-specific risk be diversified away by investing in both Shelton Emerging and Calvert Developed 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 Calvert Developed 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 Calvert Developed Market, you can compare the effects of market volatilities on Shelton Emerging and Calvert Developed 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 Calvert Developed. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shelton Emerging and Calvert Developed.
Diversification Opportunities for Shelton Emerging and Calvert Developed
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Shelton and Calvert is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding Shelton Emerging Markets and Calvert Developed Market in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Calvert Developed Market 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 Calvert Developed. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Calvert Developed Market has no effect on the direction of Shelton Emerging i.e., Shelton Emerging and Calvert Developed go up and down completely randomly.
Pair Corralation between Shelton Emerging and Calvert Developed
Assuming the 90 days horizon Shelton Emerging Markets is expected to generate 1.14 times more return on investment than Calvert Developed. However, Shelton Emerging is 1.14 times more volatile than Calvert Developed Market. It trades about 0.25 of its potential returns per unit of risk. Calvert Developed Market is currently generating about 0.2 per unit of risk. If you would invest 1,677 in Shelton Emerging Markets on November 29, 2024 and sell it today you would earn a total of 75.00 from holding Shelton Emerging Markets or generate 4.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shelton Emerging Markets vs. Calvert Developed Market
Performance |
| Timeline |
| Shelton Emerging Markets |
| Calvert Developed Market |
Shelton Emerging and Calvert Developed Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shelton Emerging and Calvert Developed
The main advantage of trading using opposite Shelton Emerging and Calvert Developed positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelton Emerging position performs unexpectedly, Calvert Developed 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 Calvert Developed will offset losses from the drop in Calvert Developed's long position.The idea behind Shelton Emerging Markets and Calvert Developed Market 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.| Calvert Developed vs. Calvert Large Cap | Calvert Developed vs. Calvert Large Cap | Calvert Developed vs. Calvert Mid Cap | Calvert Developed vs. Calvert Short Duration |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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