Correlation Between Shelton Emerging and Siit Emerging

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

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

Diversification Opportunities for Shelton Emerging and Siit Emerging

0.95

Correlation Coefficient

Shelton Emerging  Siit Emerging

Almost no diversification

The 3 months correlation between Shelton and Siit is 0.95. Overlapping area represents the amount of risk that can be diversified away by holding Shelton Emerging Markets and Siit Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Siit Emerging Markets and Shelton Emerging 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 Emerging Markets are associated (or correlated) with Siit Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Siit Emerging Markets has no effect on the direction of Shelton Emerging i.e., Shelton Emerging and Siit Emerging go up and down completely randomly.

Pair Corralation between Shelton Emerging and Siit Emerging

Assuming the 90 days horizon Shelton Emerging Markets is expected to under-perform the Siit Emerging. In addition to that, Shelton Emerging is 1.1 times more volatile than Siit Emerging Markets. It trades about -0.14 of its total potential returns per unit of risk. Siit Emerging Markets is currently generating about -0.02 per unit of volatility. If you would invest  946.00  in Siit Emerging Markets on January 26, 2024 and sell it today you would lose (3.00) from holding Siit Emerging Markets or give up 0.32% of portfolio value over 90 days.

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

Shelton Emerging Markets  vs.  Siit Emerging Markets

Shelton Emerging Markets

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Shelton Emerging Markets are ranked lower than 6 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong essential indicators, Shelton Emerging is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Siit Emerging Markets

Risk-Adjusted Performance

11 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Siit Emerging Markets are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Siit Emerging 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 Emerging and Siit Emerging

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

The idea behind Shelton Emerging Markets and Siit 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.