Correlation Between Nasdaq-100 Index and Shelton International
Can any of the company-specific risk be diversified away by investing in both Nasdaq-100 Index and Shelton International 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 Nasdaq-100 Index and Shelton International into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Nasdaq 100 Index Fund and Shelton International Select, you can compare the effects of market volatilities on Nasdaq-100 Index and Shelton International 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 Nasdaq-100 Index with a short position of Shelton International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100 Index and Shelton International.
Diversification Opportunities for Nasdaq-100 Index and Shelton International
-0.21 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Nasdaq-100 and Shelton is -0.21. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund and Shelton International Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelton International and Nasdaq-100 Index 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 Nasdaq 100 Index Fund are associated (or correlated) with Shelton International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelton International has no effect on the direction of Nasdaq-100 Index i.e., Nasdaq-100 Index and Shelton International go up and down completely randomly.
Pair Corralation between Nasdaq-100 Index and Shelton International
Assuming the 90 days horizon Nasdaq 100 Index Fund is expected to generate 1.58 times more return on investment than Shelton International. However, Nasdaq-100 Index is 1.58 times more volatile than Shelton International Select. It trades about 0.08 of its potential returns per unit of risk. Shelton International Select is currently generating about -0.21 per unit of risk. If you would invest 4,088 in Nasdaq 100 Index Fund on August 29, 2024 and sell it today you would earn a total of 81.00 from holding Nasdaq 100 Index Fund or generate 1.98% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Nasdaq 100 Index Fund vs. Shelton International Select
Performance |
| Timeline |
| Nasdaq 100 Index |
| Shelton International |
Nasdaq-100 Index and Shelton International Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Nasdaq-100 Index and Shelton International
The main advantage of trading using opposite Nasdaq-100 Index and Shelton International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100 Index position performs unexpectedly, Shelton International 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 Shelton International will offset losses from the drop in Shelton International's long position.| Nasdaq-100 Index vs. Nasdaq 100 Index Fund | Nasdaq-100 Index vs. Nasdaq 100 Index Fund | Nasdaq-100 Index vs. Fidelity Zero Large | Nasdaq-100 Index vs. Vanguard Russell 2000 |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
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