Correlation Between Shelton Emerging and Western Assets
Can any of the company-specific risk be diversified away by investing in both Shelton Emerging and Western Assets 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 Western Assets 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 Western Assets Emerging, you can compare the effects of market volatilities on Shelton Emerging and Western Assets 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 Western Assets. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shelton Emerging and Western Assets.
Diversification Opportunities for Shelton Emerging and Western Assets
0.48 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Shelton and Western is 0.48. Overlapping area represents the amount of risk that can be diversified away by holding Shelton Emerging Markets and Western Assets Emerging in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Assets Emerging 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 Western Assets. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Assets Emerging has no effect on the direction of Shelton Emerging i.e., Shelton Emerging and Western Assets go up and down completely randomly.
Pair Corralation between Shelton Emerging and Western Assets
Assuming the 90 days horizon Shelton Emerging Markets is expected to under-perform the Western Assets. In addition to that, Shelton Emerging is 2.26 times more volatile than Western Assets Emerging. It trades about -0.2 of its total potential returns per unit of risk. Western Assets Emerging is currently generating about 0.02 per unit of volatility. If you would invest 1,067 in Western Assets Emerging on August 29, 2024 and sell it today you would earn a total of 2.00 from holding Western Assets Emerging or generate 0.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Shelton Emerging Markets vs. Western Assets Emerging
Performance |
| Timeline |
| Shelton Emerging Markets |
| Western Assets Emerging |
Shelton Emerging and Western Assets Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shelton Emerging and Western Assets
The main advantage of trading using opposite Shelton Emerging and Western Assets positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelton Emerging position performs unexpectedly, Western Assets 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 Western Assets will offset losses from the drop in Western Assets' long position.| Shelton Emerging vs. Vanguard Emerging Markets | Shelton Emerging vs. Vanguard Emerging Markets | Shelton Emerging vs. HUMANA INC | Shelton Emerging vs. Aquagold International |
| Western Assets vs. Vanguard High Yield Tax Exempt | Western Assets vs. Victory High Yield | Western Assets vs. Artisan High Income | Western Assets vs. Blrc Sgy Mnp |
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 Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.
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