Correlation Between Smead Value and Fisher Large

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

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

Diversification Opportunities for Smead Value and Fisher Large

-0.06

Correlation Coefficient

Smead Value  Fisher Large

Good diversification

The 3 months correlation between Smead and Fisher is -0.06. Overlapping area represents the amount of risk that can be diversified away by holding Smead Value Fund and Fisher Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Fisher Large Cap and Smead Value 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 Value Fund are associated (or correlated) with Fisher Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Fisher Large Cap has no effect on the direction of Smead Value i.e., Smead Value and Fisher Large go up and down completely randomly.

Pair Corralation between Smead Value and Fisher Large

Assuming the 90 days horizon Smead Value Fund is expected to under-perform the Fisher Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Smead Value Fund is 1.05 times less risky than Fisher Large. The mutual fund trades about -0.12 of its potential returns per unit of risk. The Fisher Large Cap is currently generating about 0.05 of returns per unit of risk over similar time horizon. If you would invest  1,779  in Fisher Large Cap on September 28, 2024 and sell it today you would earn a total of  42.00  from holding Fisher Large Cap or generate 2.36% return on investment over 90 days.

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

Smead Value Fund  vs.  Fisher Large Cap

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.

Fisher Large Cap

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Fisher Large Cap are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Fisher Large is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Smead Value and Fisher Large

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

The idea behind Smead Value Fund and Fisher Large Cap 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.