Correlation Between Nasdaq 100 and Shelton Green

Can any of the company-specific risk be diversified away by investing in both Nasdaq 100 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 Nasdaq 100 and Shelton Green into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Nasdaq 100 Index Fund and Shelton Green Alpha, you can compare the effects of market volatilities on Nasdaq 100 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 Nasdaq 100 with a short position of Shelton Green. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq 100 and Shelton Green.

Diversification Opportunities for Nasdaq 100 and Shelton Green

0.35

Correlation Coefficient

Nasdaq 100  Shelton Green

Weak diversification

The 3 months correlation between Nasdaq and Shelton is 0.35. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 Index Fund 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 Nasdaq 100 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 Nasdaq 100 Index Fund 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 Nasdaq 100 i.e., Nasdaq 100 and Shelton Green go up and down completely randomly.

Pair Corralation between Nasdaq 100 and Shelton Green

Assuming the 90 days horizon Nasdaq 100 is expected to generate 1.27 times less return on investment than Shelton Green. In addition to that, Nasdaq 100 is 1.67 times more volatile than Shelton Green Alpha. It trades about 0.04 of its total potential returns per unit of risk. Shelton Green Alpha is currently generating about 0.08 per unit of volatility. If you would invest  3,188  in Shelton Green Alpha on September 13, 2024 and sell it today you would earn a total of  122.00  from holding Shelton Green Alpha or generate 3.83% return on investment over 90 days.

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

Nasdaq 100 Index Fund  vs.  Shelton Green Alpha

Nasdaq 100 Index

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Nasdaq 100 Index Fund 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, Nasdaq 100 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

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shelton Green Alpha are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong forward indicators, Shelton Green is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Nasdaq 100 and Shelton Green

The main advantage of trading using opposite Nasdaq 100 and Shelton Green positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq 100 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 Nasdaq 100 Index Fund 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.