Correlation Between Shelton E and California Tax-free

Can any of the company-specific risk be diversified away by investing in both Shelton E and California Tax-free 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 E and California Tax-free into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Shelton E Value and California Tax Free Income, you can compare the effects of market volatilities on Shelton E and California Tax-free 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 E with a short position of California Tax-free. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shelton E and California Tax-free.

Diversification Opportunities for Shelton E and California Tax-free

-0.37

Correlation Coefficient

Shelton E  California Tax-free

Very good diversification

The 3 months correlation between Shelton and California is -0.37. Overlapping area represents the amount of risk that can be diversified away by holding Shelton E Value and California Tax Free Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on California Tax Free and Shelton E 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 E Value are associated (or correlated) with California Tax-free. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of California Tax Free has no effect on the direction of Shelton E i.e., Shelton E and California Tax-free go up and down completely randomly.

Pair Corralation between Shelton E and California Tax-free

Assuming the 90 days horizon Shelton E Value is expected to generate 2.86 times more return on investment than California Tax-free. However, Shelton E is 2.86 times more volatile than California Tax Free Income. It trades about 0.21 of its potential returns per unit of risk. California Tax Free Income is currently generating about 0.04 per unit of risk. If you would invest  1,682  in Shelton E Value on August 31, 2024 and sell it today you would earn a total of  124.00  from holding Shelton E Value or generate 7.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Shelton E Value  vs.  California Tax Free Income

Shelton E Value

Risk-Adjusted Performance

16 of 100

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Shelton E Value are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward indicators, Shelton E may actually be approaching a critical reversion point that can send shares even higher in December 2024.

California Tax Free

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in California Tax Free Income are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, California Tax-free is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shelton E and California Tax-free

The main advantage of trading using opposite Shelton E and California Tax-free positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Shelton E position performs unexpectedly, California Tax-free 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 California Tax-free will offset losses from the drop in California Tax-free's long position.

The idea behind Shelton E Value and California Tax Free Income pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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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 Funds Screener module to find actively-traded funds from around the world traded on over 30 global exchanges.