Correlation Between Access Capital and Smead Value

Can any of the company-specific risk be diversified away by investing in both Access Capital 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 Access Capital and Smead Value into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Access Capital Munity and Smead Value Fund, you can compare the effects of market volatilities on Access Capital 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 Access Capital with a short position of Smead Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of Access Capital and Smead Value.

Diversification Opportunities for Access Capital and Smead Value

0.63

Correlation Coefficient

Access Capital  Smead Value

Poor diversification

The 3 months correlation between Access and Smead is 0.63. Overlapping area represents the amount of risk that can be diversified away by holding Access Capital Munity 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 Access Capital 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 Access Capital Munity 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 Access Capital i.e., Access Capital and Smead Value go up and down completely randomly.

Pair Corralation between Access Capital and Smead Value

Assuming the 90 days horizon Access Capital is expected to generate 4.19 times less return on investment than Smead Value. But when comparing it to its historical volatility, Access Capital Munity is 2.15 times less risky than Smead Value. It trades about 0.03 of its potential returns per unit of risk. Smead Value Fund is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  6,735  in Smead Value Fund on September 30, 2024 and sell it today you would earn a total of  1,156  from holding Smead Value Fund or generate 17.16% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Access Capital Munity  vs.  Smead Value Fund

Access Capital Munity

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Access Capital Munity has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Access Capital is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Smead Value Fund

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Smead Value Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's essential indicators remain strong and the current disturbance on Wall Street may also be a sign of long term gains for the fund investors.

Pair Trading with Access Capital and Smead Value

The main advantage of trading using opposite Access Capital and Smead Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Access Capital 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.

The idea behind Access Capital Munity and Smead Value Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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 Headlines Timeline module to stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity.