Correlation Between American Funds and Smead Value
Can any of the company-specific risk be diversified away by investing in both American Funds and Smead Value 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 American Funds and Smead Value into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds American and Smead Value Fund, you can compare the effects of market volatilities on American Funds and Smead Value 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 American Funds with a short position of Smead Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and Smead Value.
Diversification Opportunities for American Funds and Smead Value
0.57 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Smead is 0.57. Overlapping area represents the amount of risk that can be diversified away by holding American Funds American and Smead Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smead Value Fund and American Funds 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 American Funds American are associated (or correlated) with Smead Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smead Value Fund has no effect on the direction of American Funds i.e., American Funds and Smead Value go up and down completely randomly.
Pair Corralation between American Funds and Smead Value
Assuming the 90 days horizon American Funds is expected to generate 1.2 times less return on investment than Smead Value. But when comparing it to its historical volatility, American Funds American is 1.25 times less risky than Smead Value. It trades about 0.24 of its potential returns per unit of risk. Smead Value Fund is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 7,937 in Smead Value Fund on September 1, 2024 and sell it today you would earn a total of 313.00 from holding Smead Value Fund or generate 3.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Funds American vs. Smead Value Fund
Performance |
| Timeline |
| American Funds American |
| Smead Value Fund |
American Funds and Smead Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and Smead Value
The main advantage of trading using opposite American Funds and Smead Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, Smead Value 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 Smead Value will offset losses from the drop in Smead Value's long position.| American Funds vs. Gmo High Yield | American Funds vs. Blackrock High Yield | American Funds vs. Virtus High Yield | American Funds vs. Pioneer High Yield |
| Smead Value vs. Invesco Sp 500 | Smead Value vs. Morgan Stanley Government | Smead Value vs. Smead Value Fund | Smead Value vs. Smead Value Fund |
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 Portfolio Center module to all portfolio management and optimization tools to improve performance of your portfolios.
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