Correlation Between First Investors and Smead Funds

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

By analyzing existing cross correlation between First Investors Opportunity and Smead Funds Trust, you can compare the effects of market volatilities on First Investors 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 First Investors with a short position of Smead Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of First Investors and Smead Funds.

Diversification Opportunities for First Investors and Smead Funds

-0.29

Correlation Coefficient

First Investors  Smead Funds

Very good diversification

The 3 months correlation between First and Smead is -0.29. Overlapping area represents the amount of risk that can be diversified away by holding First Investors Opportunity 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 First Investors 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 First Investors Opportunity 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 First Investors i.e., First Investors and Smead Funds go up and down completely randomly.

Pair Corralation between First Investors and Smead Funds

Assuming the 90 days horizon First Investors Opportunity is expected to under-perform the Smead Funds. But the mutual fund apears to be less risky and, when comparing its historical volatility, First Investors Opportunity is 1.04 times less risky than Smead Funds. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Smead Funds Trust is currently generating about 0.2 of returns per unit of risk over similar time horizon. If you would invest  5,307  in Smead Funds Trust on December 22, 2024 and sell it today you would earn a total of  655.00  from holding Smead Funds Trust or generate 12.34% return on investment over 90 days.

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

First Investors Opportunity  vs.  Smead Funds Trust

First Investors Oppo

Risk-Adjusted Performance

Very Weak

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

Smead Funds Trust

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smead Funds Trust are ranked lower than 15 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak essential indicators, Smead Funds may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with First Investors and Smead Funds

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

The idea behind First Investors Opportunity and Smead Funds Trust 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.

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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 Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.