Correlation Between Shelton Funds and Century Small

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

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

Diversification Opportunities for Shelton Funds and Century Small

0.95

Correlation Coefficient

Shelton Funds  Century Small

Almost no diversification

The 3 months correlation between Shelton and Century is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Shelton Funds and Century Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Century Small Cap and Shelton Funds 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 Funds are associated (or correlated) with Century Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Century Small Cap has no effect on the direction of Shelton Funds i.e., Shelton Funds and Century Small go up and down completely randomly.

Pair Corralation between Shelton Funds and Century Small

Assuming the 90 days horizon Shelton Funds is expected to generate 1.04 times more return on investment than Century Small. However, Shelton Funds is 1.04 times more volatile than Century Small Cap. It trades about -0.08 of its potential returns per unit of risk. Century Small Cap is currently generating about -0.09 per unit of risk. If you would invest  3,990  in Shelton Funds on December 27, 2024 and sell it today you would lose (284.00) from holding Shelton Funds or give up 7.12% of portfolio value over 90 days.

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

Shelton Funds   vs.  Century Small Cap

Shelton Funds

Risk-Adjusted Performance

Very Weak

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

Century Small Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Century Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Funds and Century Small

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

The idea behind Shelton Funds and Century 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 ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.