Correlation Between Metropolitan West and Smead International

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

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

Diversification Opportunities for Metropolitan West and Smead International

0.0

Correlation Coefficient

Metropolitan West  Smead International

Pay attention - limited upside

The 3 months correlation between Metropolitan and Smead is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding Metropolitan West Porate and Smead International Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smead International Value and Metropolitan West 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 Metropolitan West Porate are associated (or correlated) with Smead International. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smead International Value has no effect on the direction of Metropolitan West i.e., Metropolitan West and Smead International go up and down completely randomly.

Pair Corralation between Metropolitan West and Smead International

If you would invest  4,984  in Smead International Value on December 22, 2024 and sell it today you would earn a total of  506.00  from holding Smead International Value or generate 10.15% return on investment over 90 days.

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

Metropolitan West Porate  vs.  Smead International Value

Metropolitan West Porate

Risk-Adjusted Performance

Very Weak

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

Smead International Value

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Smead International Value are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak fundamental indicators, Smead International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Pair Trading with Metropolitan West and Smead International

The main advantage of trading using opposite Metropolitan West and Smead International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Metropolitan West position performs unexpectedly, Smead International 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 International will offset losses from the drop in Smead International's long position.

The idea behind Metropolitan West Porate and Smead International Value 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.