Correlation Between Mid-cap 15x and Shelton International

Can any of the company-specific risk be diversified away by investing in both Mid-cap 15x and Shelton International 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 Mid-cap 15x and Shelton International into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Mid Cap 15x Strategy and Shelton International Select, you can compare the effects of market volatilities on Mid-cap 15x and Shelton International 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 Mid-cap 15x with a short position of Shelton International. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mid-cap 15x and Shelton International.

Diversification Opportunities for Mid-cap 15x and Shelton International

-0.36

Correlation Coefficient

Mid-cap 15x  Shelton International

Very good diversification

The 3 months correlation between Mid-cap and Shelton is -0.36. Overlapping area represents the amount of risk that can be diversified away by holding Mid Cap 15x Strategy and Shelton International Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shelton International and Mid-cap 15x 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 Mid Cap 15x Strategy are associated (or correlated) with Shelton International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shelton International has no effect on the direction of Mid-cap 15x i.e., Mid-cap 15x and Shelton International go up and down completely randomly.

Pair Corralation between Mid-cap 15x and Shelton International

Assuming the 90 days horizon Mid Cap 15x Strategy is expected to generate 1.88 times more return on investment than Shelton International. However, Mid-cap 15x is 1.88 times more volatile than Shelton International Select. It trades about 0.18 of its potential returns per unit of risk. Shelton International Select is currently generating about -0.04 per unit of risk. If you would invest  12,728  in Mid Cap 15x Strategy on September 3, 2024 and sell it today you would earn a total of  2,190  from holding Mid Cap 15x Strategy or generate 17.21% return on investment over 90 days.

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

Mid Cap 15x Strategy  vs.  Shelton International Select

Mid Cap 15x

Risk-Adjusted Performance

14 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mid Cap 15x Strategy are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Mid-cap 15x showed solid returns over the last few months and may actually be approaching a breakup point.

Shelton International

Risk-Adjusted Performance

0 of 100

Very Weak

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

Pair Trading with Mid-cap 15x and Shelton International

The main advantage of trading using opposite Mid-cap 15x and Shelton International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mid-cap 15x position performs unexpectedly, Shelton International 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 International will offset losses from the drop in Shelton International's long position.

The idea behind Mid Cap 15x Strategy and Shelton International Select 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.

Check out your portfolio center.

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 Idea Analyzer module to analyze all characteristics, volatility and risk-adjusted return of Macroaxis ideas.