Correlation Between Frost Growth and Shelton Emerging

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

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

Diversification Opportunities for Frost Growth and Shelton Emerging

0.79

Correlation Coefficient

Frost Growth  Shelton Emerging

Poor diversification

The 3 months correlation between Frost and Shelton is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Frost Growth Equity 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 Frost Growth 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 Frost Growth Equity 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 Frost Growth i.e., Frost Growth and Shelton Emerging go up and down completely randomly.

Pair Corralation between Frost Growth and Shelton Emerging

Assuming the 90 days horizon Frost Growth Equity is expected to under-perform the Shelton Emerging. In addition to that, Frost Growth is 3.1 times more volatile than Shelton Emerging Markets. It trades about -0.09 of its total potential returns per unit of risk. Shelton Emerging Markets is currently generating about -0.16 per unit of volatility. If you would invest  1,775  in Shelton Emerging Markets on October 20, 2024 and sell it today you would lose (140.00) from holding Shelton Emerging Markets or give up 7.89% of portfolio value over 90 days.

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

Frost Growth Equity  vs.  Shelton Emerging Markets

Frost Growth Equity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Frost Growth Equity has generated negative risk-adjusted returns adding no value to fund investors. In spite of weak performance in the last few months, the Fund's technical and fundamental indicators remain fairly strong which may send shares a bit higher in February 2025. The current disturbance may also be a sign of long term up-swing for the fund investors.

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 latest weak performance, the Fund's essential 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 Frost Growth and Shelton Emerging

The main advantage of trading using opposite Frost Growth and Shelton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Frost Growth 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 Frost Growth Equity 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..