Correlation Between Shelton Emerging and Scout Small

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

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

Diversification Opportunities for Shelton Emerging and Scout Small

-0.53

Correlation Coefficient

Shelton Emerging  Scout Small

Excellent diversification

The 3 months correlation between Shelton and Scout is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Shelton Emerging Markets and Scout Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Scout Small Cap and Shelton Emerging 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 Emerging Markets are associated (or correlated) with Scout Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Scout Small Cap has no effect on the direction of Shelton Emerging i.e., Shelton Emerging and Scout Small go up and down completely randomly.

Pair Corralation between Shelton Emerging and Scout Small

Assuming the 90 days horizon Shelton Emerging Markets is expected to generate 0.56 times more return on investment than Scout Small. However, Shelton Emerging Markets is 1.77 times less risky than Scout Small. It trades about 0.08 of its potential returns per unit of risk. Scout Small Cap is currently generating about -0.08 per unit of risk. If you would invest  1,665  in Shelton Emerging Markets on December 28, 2024 and sell it today you would earn a total of  76.00  from holding Shelton Emerging Markets or generate 4.56% return on investment over 90 days.

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

Shelton Emerging Markets  vs.  Scout Small Cap

Shelton Emerging Markets

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shelton Emerging Markets are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. 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.

Scout Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Scout Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's technical indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Shelton Emerging and Scout Small

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

The idea behind Shelton Emerging Markets and Scout Small Cap 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.