Correlation Between Smead International and Smead Funds
Can any of the company-specific risk be diversified away by investing in both Smead International and Smead Funds 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 International and Smead Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Smead International Value and Smead Funds Trust, you can compare the effects of market volatilities on Smead International and Smead Funds 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 International with a short position of Smead Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smead International and Smead Funds.
Diversification Opportunities for Smead International and Smead Funds
1.0 | Correlation Coefficient |
No risk reduction
The 3 months correlation between Smead and Smead is 1.0. Overlapping area represents the amount of risk that can be diversified away by holding Smead International Value and Smead Funds Trust in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smead Funds Trust and Smead International 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 International Value are associated (or correlated) with Smead Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smead Funds Trust has no effect on the direction of Smead International i.e., Smead International and Smead Funds go up and down completely randomly.
Pair Corralation between Smead International and Smead Funds
Assuming the 90 days horizon Smead International is expected to generate 1.06 times less return on investment than Smead Funds. But when comparing it to its historical volatility, Smead International Value is 1.0 times less risky than Smead Funds. It trades about 0.04 of its potential returns per unit of risk. Smead Funds Trust is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest 4,463 in Smead Funds Trust on September 12, 2024 and sell it today you would earn a total of 1,142 from holding Smead Funds Trust or generate 25.59% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Smead International Value vs. Smead Funds Trust
Performance |
| Timeline |
| Smead International Value |
| Smead Funds Trust |
Smead International and Smead Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Smead International and Smead Funds
The main advantage of trading using opposite Smead International and Smead Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smead International position performs unexpectedly, Smead Funds 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 Funds will offset losses from the drop in Smead Funds' long position.| Smead International vs. Transamerica Emerging Markets | Smead International vs. Investec Emerging Markets | Smead International vs. Vy Jpmorgan Emerging | Smead International vs. Pnc Emerging Markets |
| Smead Funds vs. Ab Value Fund | Smead Funds vs. Fa 529 Aggressive | Smead Funds vs. Leggmason Partners Institutional | Smead Funds vs. Balanced Fund Investor |
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 Crypto Correlations module to use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins.
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