Correlation Between Shelton International and Baron International

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

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

Diversification Opportunities for Shelton International and Baron International

0.79

Correlation Coefficient

Shelton International  Baron International

Poor diversification

The 3 months correlation between Shelton and Baron is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding Shelton International Select and Baron International Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Baron International and Shelton International 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 International Select are associated (or correlated) with Baron International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Baron International has no effect on the direction of Shelton International i.e., Shelton International and Baron International go up and down completely randomly.

Pair Corralation between Shelton International and Baron International

Assuming the 90 days horizon Shelton International Select is expected to generate 0.89 times more return on investment than Baron International. However, Shelton International Select is 1.12 times less risky than Baron International. It trades about 0.03 of its potential returns per unit of risk. Baron International Growth is currently generating about 0.02 per unit of risk. If you would invest  2,074  in Shelton International Select on October 26, 2024 and sell it today you would earn a total of  243.00  from holding Shelton International Select or generate 11.72% return on investment over 90 days.

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

Shelton International Select  vs.  Baron International Growth

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 essential indicators, Shelton International is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Baron International

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Baron International Growth has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Baron 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 Shelton International and Baron International

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

The idea behind Shelton International Select and Baron International Growth 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 Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.