Correlation Between Shelton International and Sp Smallcap

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

By analyzing existing cross correlation between Shelton International Select and Sp Smallcap Index, you can compare the effects of market volatilities on Shelton International and Sp Smallcap 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 International with a short position of Sp Smallcap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shelton International and Sp Smallcap.

Diversification Opportunities for Shelton International and Sp Smallcap

-0.37

Correlation Coefficient

Shelton International  Sp Smallcap

Very good diversification

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

Pair Corralation between Shelton International and Sp Smallcap

Assuming the 90 days horizon Shelton International Select is expected to under-perform the Sp Smallcap. But the mutual fund apears to be less risky and, when comparing its historical volatility, Shelton International Select is 2.19 times less risky than Sp Smallcap. The mutual fund trades about -0.04 of its potential returns per unit of risk. The Sp Smallcap Index is currently generating about 0.04 of returns per unit of risk over similar time horizon. If you would invest  2,217  in Sp Smallcap Index on September 4, 2024 and sell it today you would earn a total of  65.00  from holding Sp Smallcap Index or generate 2.93% return on investment over 90 days.

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

Shelton International Select  vs.  Sp Smallcap Index

Shelton International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Shelton International Select has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Shelton International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Sp Smallcap Index

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Sp Smallcap Index are ranked lower than 2 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward-looking signals, Sp Smallcap 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 International and Sp Smallcap

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

The idea behind Shelton International Select and Sp Smallcap Index 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 Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.