Correlation Between Smead Value and Global Technology
Can any of the company-specific risk be diversified away by investing in both Smead Value and Global Technology 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 Smead Value and Global Technology into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smead Value Fund and Global Technology Portfolio, you can compare the effects of market volatilities on Smead Value and Global Technology 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 Smead Value with a short position of Global Technology. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smead Value and Global Technology.
Diversification Opportunities for Smead Value and Global Technology
-0.09 | Correlation Coefficient |
Good diversification
The 3 months correlation between Smead and Global is -0.09. Overlapping area represents the amount of risk that can be diversified away by holding Smead Value Fund and Global Technology Portfolio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Global Technology and Smead Value 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 Smead Value Fund are associated (or correlated) with Global Technology. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Global Technology has no effect on the direction of Smead Value i.e., Smead Value and Global Technology go up and down completely randomly.
Pair Corralation between Smead Value and Global Technology
Assuming the 90 days horizon Smead Value is expected to generate 3.25 times less return on investment than Global Technology. But when comparing it to its historical volatility, Smead Value Fund is 1.34 times less risky than Global Technology. It trades about 0.05 of its potential returns per unit of risk. Global Technology Portfolio is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,021 in Global Technology Portfolio on September 15, 2024 and sell it today you would earn a total of 1,161 from holding Global Technology Portfolio or generate 113.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smead Value Fund vs. Global Technology Portfolio
Performance |
| Timeline |
| Smead Value Fund |
| Global Technology |
Smead Value and Global Technology Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smead Value and Global Technology
The main advantage of trading using opposite Smead Value and Global Technology positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smead Value position performs unexpectedly, Global Technology 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 Global Technology will offset losses from the drop in Global Technology's long position.| Smead Value vs. Matthew 25 Fund | Smead Value vs. Baron Real Estate | Smead Value vs. Buffalo Emerging Opportunities | Smead Value vs. Eventide Gilead Fund |
| Global Technology vs. Smead Value Fund | Global Technology vs. Guidemark Large Cap | Global Technology vs. Pace Large Growth | Global Technology vs. Enhanced Large Pany |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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