Correlation Between Shelton Emerging and Pear Tree
Can any of the company-specific risk be diversified away by investing in both Shelton Emerging and Pear Tree 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 Pear Tree 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 Pear Tree Polaris, you can compare the effects of market volatilities on Shelton Emerging and Pear Tree 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 Pear Tree. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shelton Emerging and Pear Tree.
Diversification Opportunities for Shelton Emerging and Pear Tree
0.32 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shelton and Pear is 0.32. Overlapping area represents the amount of risk that can be diversified away by holding Shelton Emerging Markets and Pear Tree Polaris in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pear Tree Polaris 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 Pear Tree. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pear Tree Polaris has no effect on the direction of Shelton Emerging i.e., Shelton Emerging and Pear Tree go up and down completely randomly.
Pair Corralation between Shelton Emerging and Pear Tree
Assuming the 90 days horizon Shelton Emerging is expected to generate 1.4 times less return on investment than Pear Tree. In addition to that, Shelton Emerging is 1.02 times more volatile than Pear Tree Polaris. It trades about 0.03 of its total potential returns per unit of risk. Pear Tree Polaris is currently generating about 0.04 per unit of volatility. If you would invest 1,452 in Pear Tree Polaris on September 2, 2024 and sell it today you would earn a total of 108.00 from holding Pear Tree Polaris or generate 7.44% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shelton Emerging Markets vs. Pear Tree Polaris
Performance |
| Timeline |
| Shelton Emerging Markets |
| Pear Tree Polaris |
Shelton Emerging and Pear Tree Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shelton Emerging and Pear Tree
The main advantage of trading using opposite Shelton Emerging and Pear Tree positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelton Emerging position performs unexpectedly, Pear Tree 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 Pear Tree will offset losses from the drop in Pear Tree's long position.The idea behind Shelton Emerging Markets and Pear Tree Polaris 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.| Pear Tree vs. Pear Tree Polaris | Pear Tree vs. Seafarer Overseas Growth | Pear Tree vs. International Fund International | Pear Tree vs. Lazard Global Listed |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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