Correlation Between Shelton Emerging and Smallcap World
Can any of the company-specific risk be diversified away by investing in both Shelton Emerging and Smallcap World 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 Smallcap World 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 Smallcap World Fund, you can compare the effects of market volatilities on Shelton Emerging and Smallcap World 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 Smallcap World. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shelton Emerging and Smallcap World.
Diversification Opportunities for Shelton Emerging and Smallcap World
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Shelton and SMALLCAP is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Shelton Emerging Markets and Smallcap World Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smallcap World 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 Smallcap World. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smallcap World has no effect on the direction of Shelton Emerging i.e., Shelton Emerging and Smallcap World go up and down completely randomly.
Pair Corralation between Shelton Emerging and Smallcap World
Assuming the 90 days horizon Shelton Emerging Markets is expected to under-perform the Smallcap World. In addition to that, Shelton Emerging is 1.15 times more volatile than Smallcap World Fund. It trades about -0.27 of its total potential returns per unit of risk. Smallcap World Fund is currently generating about 0.23 per unit of volatility. If you would invest 7,109 in Smallcap World Fund on September 4, 2024 and sell it today you would earn a total of 303.00 from holding Smallcap World Fund or generate 4.26% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 95.24% |
| Values | Daily Returns |
Shelton Emerging Markets vs. Smallcap World Fund
Performance |
| Timeline |
| Shelton Emerging Markets |
| Smallcap World |
Shelton Emerging and Smallcap World Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shelton Emerging and Smallcap World
The main advantage of trading using opposite Shelton Emerging and Smallcap World positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelton Emerging position performs unexpectedly, Smallcap World 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 Smallcap World will offset losses from the drop in Smallcap World's long position.The idea behind Shelton Emerging Markets and Smallcap World Fund 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.| Smallcap World vs. John Hancock Financial | Smallcap World vs. Fidelity Advisor Financial | Smallcap World vs. Davis Financial Fund | Smallcap World vs. Transamerica Financial Life |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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