Correlation Between Smead Value and Akre Focus
Can any of the company-specific risk be diversified away by investing in both Smead Value and Akre Focus 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 Akre Focus 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 Akre Focus Fund, you can compare the effects of market volatilities on Smead Value and Akre Focus 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 Akre Focus. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smead Value and Akre Focus.
Diversification Opportunities for Smead Value and Akre Focus
0.52 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Smead and Akre is 0.52. Overlapping area represents the amount of risk that can be diversified away by holding Smead Value Fund and Akre Focus Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akre Focus Fund 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 Akre Focus. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akre Focus Fund has no effect on the direction of Smead Value i.e., Smead Value and Akre Focus go up and down completely randomly.
Pair Corralation between Smead Value and Akre Focus
Assuming the 90 days horizon Smead Value is expected to generate 1.45 times less return on investment than Akre Focus. In addition to that, Smead Value is 1.08 times more volatile than Akre Focus Fund. It trades about 0.06 of its total potential returns per unit of risk. Akre Focus Fund is currently generating about 0.09 per unit of volatility. If you would invest 4,759 in Akre Focus Fund on September 12, 2024 and sell it today you would earn a total of 2,232 from holding Akre Focus Fund or generate 46.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smead Value Fund vs. Akre Focus Fund
Performance |
| Timeline |
| Smead Value Fund |
| Akre Focus Fund |
Smead Value and Akre Focus Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smead Value and Akre Focus
The main advantage of trading using opposite Smead Value and Akre Focus positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smead Value position performs unexpectedly, Akre Focus 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 Akre Focus will offset losses from the drop in Akre Focus' long position.| Smead Value vs. Vanguard Value Index | Smead Value vs. Dodge Cox Stock | Smead Value vs. American Mutual Fund | Smead Value vs. American Funds American |
| Akre Focus vs. Akre Focus Fund | Akre Focus vs. Akre Focus Fund | Akre Focus vs. T Rowe Price | Akre Focus vs. Aqr Diversified Arbitrage |
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 Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.
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