Correlation Between Sp Smallcap and Shelton Emerging
Can any of the company-specific risk be diversified away by investing in both Sp Smallcap 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 Sp Smallcap and Shelton Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Sp Smallcap Index and Shelton Emerging Markets, you can compare the effects of market volatilities on Sp Smallcap 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 Sp Smallcap with a short position of Shelton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Sp Smallcap and Shelton Emerging.
Diversification Opportunities for Sp Smallcap and Shelton Emerging
-0.13 | Correlation Coefficient |
Good diversification
The 3 months correlation between SMCIX and Shelton is -0.13. Overlapping area represents the amount of risk that can be diversified away by holding Sp Smallcap Index 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 Sp Smallcap 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 Sp Smallcap Index 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 Sp Smallcap i.e., Sp Smallcap and Shelton Emerging go up and down completely randomly.
Pair Corralation between Sp Smallcap and Shelton Emerging
Assuming the 90 days horizon Sp Smallcap Index is expected to under-perform the Shelton Emerging. In addition to that, Sp Smallcap is 2.45 times more volatile than Shelton Emerging Markets. It trades about -0.17 of its total potential returns per unit of risk. Shelton Emerging Markets is currently generating about -0.02 per unit of volatility. If you would invest 1,760 in Shelton Emerging Markets on September 19, 2024 and sell it today you would lose (6.00) from holding Shelton Emerging Markets or give up 0.34% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
Sp Smallcap Index vs. Shelton Emerging Markets
Performance |
| Timeline |
| Sp Smallcap Index |
| Shelton Emerging Markets |
Sp Smallcap and Shelton Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Sp Smallcap and Shelton Emerging
The main advantage of trading using opposite Sp Smallcap and Shelton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Sp Smallcap 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.| Sp Smallcap vs. Shelton Emerging Markets | Sp Smallcap vs. Shelton Emerging Markets | Sp Smallcap vs. California Tax Free Income | Sp Smallcap vs. Shelton Funds |
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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.
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