Correlation Between Shelton Funds and Nuance Mid

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

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

Diversification Opportunities for Shelton Funds and Nuance Mid

0.72

Correlation Coefficient

Shelton Funds  Nuance Mid

Poor diversification

The 3 months correlation between Shelton and Nuance is 0.72. Overlapping area represents the amount of risk that can be diversified away by holding Shelton Funds and Nuance Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nuance Mid 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 Nuance Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nuance Mid Cap has no effect on the direction of Shelton Funds i.e., Shelton Funds and Nuance Mid go up and down completely randomly.

Pair Corralation between Shelton Funds and Nuance Mid

Assuming the 90 days horizon Shelton Funds is expected to under-perform the Nuance Mid. In addition to that, Shelton Funds is 1.51 times more volatile than Nuance Mid Cap. It trades about -0.1 of its total potential returns per unit of risk. Nuance Mid Cap is currently generating about -0.1 per unit of volatility. If you would invest  1,234  in Nuance Mid Cap on December 29, 2024 and sell it today you would lose (72.00) from holding Nuance Mid Cap or give up 5.83% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	98.39%
Values	Daily Returns

Shelton Funds   vs.  Nuance Mid 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.

Nuance Mid Cap

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nuance Mid Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Nuance Mid is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Shelton Funds and Nuance Mid

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

The idea behind Shelton Funds and Nuance Mid 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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.