Correlation Between Shelton Funds and Equity Income
Can any of the company-specific risk be diversified away by investing in both Shelton Funds and Equity Income 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 Funds and Equity Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shelton Funds and Equity Income Fund, you can compare the effects of market volatilities on Shelton Funds and Equity Income 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 Funds with a short position of Equity Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shelton Funds and Equity Income.
Diversification Opportunities for Shelton Funds and Equity Income
0.73 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shelton and Equity is 0.73. Overlapping area represents the amount of risk that can be diversified away by holding Shelton Funds and Equity Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Equity Income and Shelton Funds 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 Funds are associated (or correlated) with Equity Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Equity Income has no effect on the direction of Shelton Funds i.e., Shelton Funds and Equity Income go up and down completely randomly.
Pair Corralation between Shelton Funds and Equity Income
Assuming the 90 days horizon Shelton Funds is expected to under-perform the Equity Income. In addition to that, Shelton Funds is 2.35 times more volatile than Equity Income Fund. It trades about -0.08 of its total potential returns per unit of risk. Equity Income Fund is currently generating about 0.36 per unit of volatility. If you would invest 4,300 in Equity Income Fund on September 2, 2024 and sell it today you would earn a total of 220.00 from holding Equity Income Fund or generate 5.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Shelton Funds vs. Equity Income Fund
Performance |
| Timeline |
| Shelton Funds |
| Equity Income |
Shelton Funds and Equity Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shelton Funds and Equity Income
The main advantage of trading using opposite Shelton Funds and Equity Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelton Funds position performs unexpectedly, Equity Income 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 Equity Income will offset losses from the drop in Equity Income's long position.| Shelton Funds vs. Shelton Emerging Markets | Shelton Funds vs. Shelton Emerging Markets | Shelton Funds vs. California Tax Free Income | Shelton Funds vs. Shelton E Value |
| Equity Income vs. Principal Capital Appreciation | Equity Income vs. Diversified International Fund | Equity Income vs. Brown Advisory Growth | Equity Income vs. Midcap Fund Class |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
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