Correlation Between Smead Value and Matthew 25
Can any of the company-specific risk be diversified away by investing in both Smead Value and Matthew 25 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 Matthew 25 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 Matthew 25 Fund, you can compare the effects of market volatilities on Smead Value and Matthew 25 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 Matthew 25. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smead Value and Matthew 25.
Diversification Opportunities for Smead Value and Matthew 25
0.24 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Smead and Matthew is 0.24. Overlapping area represents the amount of risk that can be diversified away by holding Smead Value Fund and Matthew 25 Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthew 25 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 Matthew 25. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthew 25 Fund has no effect on the direction of Smead Value i.e., Smead Value and Matthew 25 go up and down completely randomly.
Pair Corralation between Smead Value and Matthew 25
Assuming the 90 days horizon Smead Value is expected to generate 2.19 times less return on investment than Matthew 25. But when comparing it to its historical volatility, Smead Value Fund is 1.29 times less risky than Matthew 25. It trades about 0.05 of its potential returns per unit of risk. Matthew 25 Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,257 in Matthew 25 Fund on September 4, 2024 and sell it today you would earn a total of 1,568 from holding Matthew 25 Fund or generate 69.47% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smead Value Fund vs. Matthew 25 Fund
Performance |
| Timeline |
| Smead Value Fund |
| Matthew 25 Fund |
Smead Value and Matthew 25 Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smead Value and Matthew 25
The main advantage of trading using opposite Smead Value and Matthew 25 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smead Value position performs unexpectedly, Matthew 25 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 Matthew 25 will offset losses from the drop in Matthew 25'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 |
| Matthew 25 vs. Buffalo Emerging Opportunities | Matthew 25 vs. Smead Value Fund | Matthew 25 vs. Hodges Small Cap | Matthew 25 vs. Amg Yacktman Focused |
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 Manager module to state of the art Portfolio Manager to monitor and improve performance of your invested capital.
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