Correlation Between William Blair and Shelton Emerging

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

By analyzing existing cross correlation between William Blair China and Shelton Emerging Markets, you can compare the effects of market volatilities on William Blair 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 William Blair with a short position of Shelton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of William Blair and Shelton Emerging.

Diversification Opportunities for William Blair and Shelton Emerging

0.56

Correlation Coefficient

William Blair  Shelton Emerging

Very weak diversification

The 3 months correlation between William and Shelton is 0.56. Overlapping area represents the amount of risk that can be diversified away by holding William Blair China 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 William Blair 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 William Blair China 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 William Blair i.e., William Blair and Shelton Emerging go up and down completely randomly.

Pair Corralation between William Blair and Shelton Emerging

Assuming the 90 days horizon William Blair China is expected to generate 1.92 times more return on investment than Shelton Emerging. However, William Blair is 1.92 times more volatile than Shelton Emerging Markets. It trades about 0.1 of its potential returns per unit of risk. Shelton Emerging Markets is currently generating about -0.05 per unit of risk. If you would invest  467.00  in William Blair China on September 22, 2024 and sell it today you would earn a total of  57.00  from holding William Blair China or generate 12.21% return on investment over 90 days.

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

William Blair China  vs.  Shelton Emerging Markets

William Blair China

Risk-Adjusted Performance

7 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in William Blair China are ranked lower than 7 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, William Blair may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Shelton Emerging Markets

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with William Blair and Shelton Emerging

The main advantage of trading using opposite William Blair and Shelton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if William Blair 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.

The idea behind William Blair China and Shelton Emerging Markets 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 Alpha Finder module to use alpha and beta coefficients to find investment opportunities after accounting for the risk.