Correlation Between Smead Value and Matthew 25

Can any of the company-specific risk be diversified away by investing in both Smead Value and Matthew 25 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 Matthew 25 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 Matthew 25 Fund, you can compare the effects of market volatilities on Smead Value and Matthew 25 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 Matthew 25. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smead Value and Matthew 25.

Diversification Opportunities for Smead Value and Matthew 25

0.91

Correlation Coefficient

Smead Value  Matthew 25

Almost no diversification

The 3 months correlation between Smead and Matthew is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Smead Value Fund and Matthew 25 Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Matthew 25 Fund 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 Matthew 25. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Matthew 25 Fund has no effect on the direction of Smead Value i.e., Smead Value and Matthew 25 go up and down completely randomly.

Pair Corralation between Smead Value and Matthew 25

Assuming the 90 days horizon Smead Value Fund is expected to generate 0.57 times more return on investment than Matthew 25. However, Smead Value Fund is 1.74 times less risky than Matthew 25. It trades about -0.05 of its potential returns per unit of risk. Matthew 25 Fund is currently generating about -0.11 per unit of risk. If you would invest  7,862  in Smead Value Fund on December 29, 2024 and sell it today you would lose (272.00) from holding Smead Value Fund or give up 3.46% of portfolio value over 90 days.

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

Smead Value Fund  vs.  Matthew 25 Fund

Smead Value Fund

Risk-Adjusted Performance

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 fairly strong essential indicators, Smead Value is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Matthew 25 Fund

Risk-Adjusted Performance

Very Weak

Over the last 90 days Matthew 25 Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of latest weak performance, the Fund's basic 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 Smead Value and Matthew 25

The main advantage of trading using opposite Smead Value and Matthew 25 positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smead Value position performs unexpectedly, Matthew 25 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 Matthew 25 will offset losses from the drop in Matthew 25's long position.

The idea behind Smead Value Fund and Matthew 25 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.

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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 Content Syndication module to quickly integrate customizable finance content to your own investment portal.