Correlation Between Energy Fund and Shelton Emerging
Can any of the company-specific risk be diversified away by investing in both Energy Fund and Shelton Emerging 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 Energy Fund and Shelton Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Energy Fund Class and Shelton Emerging Markets, you can compare the effects of market volatilities on Energy Fund and Shelton Emerging 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 Energy Fund with a short position of Shelton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Energy Fund and Shelton Emerging.
Diversification Opportunities for Energy Fund and Shelton Emerging
0.16 | Correlation Coefficient |
Average diversification
The 3 months correlation between Energy and Shelton is 0.16. Overlapping area represents the amount of risk that can be diversified away by holding Energy Fund Class and Shelton Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelton Emerging Markets and Energy Fund 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 Energy Fund Class are associated (or correlated) with Shelton Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelton Emerging Markets has no effect on the direction of Energy Fund i.e., Energy Fund and Shelton Emerging go up and down completely randomly.
Pair Corralation between Energy Fund and Shelton Emerging
Assuming the 90 days horizon Energy Fund Class is expected to generate 1.07 times more return on investment than Shelton Emerging. However, Energy Fund is 1.07 times more volatile than Shelton Emerging Markets. It trades about 0.27 of its potential returns per unit of risk. Shelton Emerging Markets is currently generating about -0.26 per unit of risk. If you would invest 23,921 in Energy Fund Class on September 4, 2024 and sell it today you would earn a total of 1,463 from holding Energy Fund Class or generate 6.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Energy Fund Class vs. Shelton Emerging Markets
Performance |
| Timeline |
| Energy Fund Class |
| Shelton Emerging Markets |
Energy Fund and Shelton Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Energy Fund and Shelton Emerging
The main advantage of trading using opposite Energy Fund and Shelton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Energy Fund position performs unexpectedly, Shelton Emerging 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 Emerging will offset losses from the drop in Shelton Emerging's long position.| Energy Fund vs. Shelton Emerging Markets | Energy Fund vs. Legg Mason Partners | Energy Fund vs. Mondrian Emerging Markets | Energy Fund vs. T Rowe Price |
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 Portfolio Analyzer module to portfolio analysis module that provides access to portfolio diagnostics and optimization engine.
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