Correlation Between Smead Funds and Smead Value
Can any of the company-specific risk be diversified away by investing in both Smead 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 Smead 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 Smead Funds Trust and Smead Value Fund, you can compare the effects of market volatilities on Smead 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 Smead Funds with a short position of Smead Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smead Funds and Smead Value.
Diversification Opportunities for Smead Funds and Smead Value
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Smead and Smead is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding Smead Funds Trust 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 Smead 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 Smead Funds Trust 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 Smead Funds i.e., Smead Funds and Smead Value go up and down completely randomly.
Pair Corralation between Smead Funds and Smead Value
Assuming the 90 days horizon Smead Funds is expected to generate 1.12 times less return on investment than Smead Value. In addition to that, Smead Funds is 1.17 times more volatile than Smead Value Fund. It trades about 0.05 of its total potential returns per unit of risk. Smead Value Fund is currently generating about 0.06 per unit of volatility. If you would invest 6,431 in Smead Value Fund on September 12, 2024 and sell it today you would earn a total of 1,933 from holding Smead Value Fund or generate 30.06% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 99.8% |
| Values | Daily Returns |
Smead Funds Trust vs. Smead Value Fund
Performance |
| Timeline |
| Smead Funds Trust |
| Smead Value Fund |
Smead Funds and Smead Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smead Funds and Smead Value
The main advantage of trading using opposite Smead Funds and Smead Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smead 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.| Smead Funds vs. Qs Global Equity | Smead Funds vs. Siit Global Managed | Smead Funds vs. Scharf Global Opportunity | Smead Funds vs. Barings Global Floating |
| Smead Value vs. Smead Value Fund | Smead Value vs. Smead Value Fund | 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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