Correlation Between GM and Smead Funds
Can any of the company-specific risk be diversified away by investing in both GM 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 GM and Smead Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between General Motors and Smead Funds Trust, you can compare the effects of market volatilities on GM 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 GM with a short position of Smead Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of GM and Smead Funds.
Diversification Opportunities for GM and Smead Funds
-0.55 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between GM and Smead is -0.55. Overlapping area represents the amount of risk that can be diversified away by holding General Motors 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 GM 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 General Motors 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 GM i.e., GM and Smead Funds go up and down completely randomly.
Pair Corralation between GM and Smead Funds
Allowing for the 90-day total investment horizon General Motors is expected to under-perform the Smead Funds. In addition to that, GM is 2.51 times more volatile than Smead Funds Trust. It trades about -0.01 of its total potential returns per unit of risk. Smead Funds Trust is currently generating about 0.16 per unit of volatility. If you would invest 5,284 in Smead Funds Trust on December 25, 2024 and sell it today you would earn a total of 525.00 from holding Smead Funds Trust or generate 9.94% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Against |
Strength | Very Weak |
Accuracy | 98.33% |
Values | Daily Returns |
General Motors vs. Smead Funds Trust
Performance |
Timeline |
General Motors |
Smead Funds Trust |
GM and Smead Funds Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with GM and Smead Funds
The main advantage of trading using opposite GM and Smead Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if GM 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 General Motors 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.Smead Funds vs. Deutsche Gold Precious | Smead Funds vs. The Gold Bullion | Smead Funds vs. First Eagle Gold | Smead Funds vs. Global Gold 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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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