Correlation Between Tax Managed and Shelton Funds

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

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

Diversification Opportunities for Tax Managed and Shelton Funds

0.42

Correlation Coefficient

Tax Managed  Shelton Funds

Very weak diversification

The 3 months correlation between Tax and Shelton is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Tax Managed Mid Small and Shelton Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelton Funds and Tax Managed 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 Tax Managed Mid Small are associated (or correlated) with Shelton Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelton Funds has no effect on the direction of Tax Managed i.e., Tax Managed and Shelton Funds go up and down completely randomly.

Pair Corralation between Tax Managed and Shelton Funds

Assuming the 90 days horizon Tax Managed Mid Small is expected to under-perform the Shelton Funds. But the mutual fund apears to be less risky and, when comparing its historical volatility, Tax Managed Mid Small is 1.12 times less risky than Shelton Funds. The mutual fund trades about -0.29 of its potential returns per unit of risk. The Shelton Funds is currently generating about -0.04 of returns per unit of risk over similar time horizon. If you would invest  3,990  in Shelton Funds on October 9, 2024 and sell it today you would lose (55.00) from holding Shelton Funds or give up 1.38% of portfolio value over 90 days.

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

Tax Managed Mid Small  vs.  Shelton Funds

Tax Managed Mid

Risk-Adjusted Performance

0 of 100

Very Weak

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

Shelton Funds

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Tax Managed and Shelton Funds

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

The idea behind Tax Managed Mid Small and Shelton Funds 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 Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.