Correlation Between Shelton Funds and Small Cap
Can any of the company-specific risk be diversified away by investing in both Shelton Funds and Small Cap 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 Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Shelton Funds and Small Cap Stock, you can compare the effects of market volatilities on Shelton Funds and Small Cap 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 Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shelton Funds and Small Cap.
Diversification Opportunities for Shelton Funds and Small Cap
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Shelton and Small is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Shelton Funds and Small Cap Stock in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Stock 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 Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Stock has no effect on the direction of Shelton Funds i.e., Shelton Funds and Small Cap go up and down completely randomly.
Pair Corralation between Shelton Funds and Small Cap
Assuming the 90 days horizon Shelton Funds is expected to generate 1.5 times less return on investment than Small Cap. In addition to that, Shelton Funds is 1.38 times more volatile than Small Cap Stock. It trades about 0.1 of its total potential returns per unit of risk. Small Cap Stock is currently generating about 0.2 per unit of volatility. If you would invest 1,317 in Small Cap Stock on November 3, 2024 and sell it today you would earn a total of 52.00 from holding Small Cap Stock or generate 3.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Shelton Funds vs. Small Cap Stock
Performance |
| Timeline |
| Shelton Funds |
| Small Cap Stock |
Shelton Funds and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Shelton Funds and Small Cap
The main advantage of trading using opposite Shelton Funds and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelton Funds position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Shelton Funds vs. Us Vector Equity | Shelton Funds vs. Smallcap World Fund | Shelton Funds vs. The Growth Equity | Shelton Funds vs. Small Cap Equity |
| Small Cap vs. Lgm Risk Managed | Small Cap vs. Artisan High Income | Small Cap vs. Catalyst Exceed Defined | Small Cap vs. Ironclad Managed Risk |
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 Bonds Directory module to find actively traded corporate debentures issued by US companies.
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