Correlation Between Nasdaq-100(r) and Shelton Emerging

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

By analyzing existing cross correlation between Nasdaq 100 2x Strategy and Shelton Emerging Markets, you can compare the effects of market volatilities on Nasdaq-100(r) 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 Nasdaq-100(r) with a short position of Shelton Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Nasdaq-100(r) and Shelton Emerging.

Diversification Opportunities for Nasdaq-100(r) and Shelton Emerging

0.33

Correlation Coefficient

Nasdaq-100(r)  Shelton Emerging

Weak diversification

The 3 months correlation between Nasdaq-100(r) and Shelton is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Nasdaq 100 2x Strategy 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 Nasdaq-100(r) 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 2x Strategy 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 Nasdaq-100(r) i.e., Nasdaq-100(r) and Shelton Emerging go up and down completely randomly.

Pair Corralation between Nasdaq-100(r) and Shelton Emerging

Assuming the 90 days horizon Nasdaq 100 2x Strategy is expected to under-perform the Shelton Emerging. In addition to that, Nasdaq-100(r) is 3.48 times more volatile than Shelton Emerging Markets. It trades about -0.07 of its total potential returns per unit of risk. Shelton Emerging Markets is currently generating about 0.14 per unit of volatility. If you would invest  1,649  in Shelton Emerging Markets on November 29, 2024 and sell it today you would earn a total of  103.00  from holding Shelton Emerging Markets or generate 6.25% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.33%
Values	Daily Returns

Nasdaq 100 2x Strategy  vs.  Shelton Emerging Markets

Nasdaq 100 2x

Risk-Adjusted Performance

Very Weak

Over the last 90 days Nasdaq 100 2x Strategy has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's fundamental indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Shelton Emerging Markets

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Shelton Emerging Markets are ranked lower than 10 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Shelton Emerging may actually be approaching a critical reversion point that can send shares even higher in March 2025.

Pair Trading with Nasdaq-100(r) and Shelton Emerging

The main advantage of trading using opposite Nasdaq-100(r) and Shelton Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Nasdaq-100(r) 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 Nasdaq 100 2x Strategy 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 Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.