Correlation Between Shelton Core and Shelton Green

Can any of the company-specific risk be diversified away by investing in both Shelton Core and Shelton Green 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 Core and Shelton Green 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 Shelton Green Alpha, you can compare the effects of market volatilities on Shelton Core and Shelton Green 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 Core with a short position of Shelton Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Shelton Core and Shelton Green.

Diversification Opportunities for Shelton Core and Shelton Green

0.7

Correlation Coefficient

Shelton Core  Shelton Green

Poor diversification

The 3 months correlation between Shelton and Shelton is 0.7. Overlapping area represents the amount of risk that can be diversified away by holding Shelton E Value and Shelton Green Alpha in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelton Green Alpha and Shelton Core 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 Shelton Green. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelton Green Alpha has no effect on the direction of Shelton Core i.e., Shelton Core and Shelton Green go up and down completely randomly.

Pair Corralation between Shelton Core and Shelton Green

Assuming the 90 days horizon Shelton E Value is expected to generate 0.65 times more return on investment than Shelton Green. However, Shelton E Value is 1.55 times less risky than Shelton Green. It trades about -0.09 of its potential returns per unit of risk. Shelton Green Alpha is currently generating about -0.17 per unit of risk. If you would invest  1,670  in Shelton E Value on December 4, 2024 and sell it today you would lose (62.00) from holding Shelton E Value or give up 3.71% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.33%
Values	Daily Returns

Shelton E Value  vs.  Shelton Green Alpha

Shelton E Value

Risk-Adjusted Performance

Very Weak

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

Shelton Green Alpha

Risk-Adjusted Performance

Very Weak

Over the last 90 days Shelton Green Alpha has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's forward 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 Core and Shelton Green

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

The idea behind Shelton E Value and Shelton Green Alpha 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 Equity Valuation module to check real value of public entities based on technical and fundamental data.