Correlation Between Smead Value and State Street
Can any of the company-specific risk be diversified away by investing in both Smead Value and State Street 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 State Street 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 State Street Target, you can compare the effects of market volatilities on Smead Value and State Street 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 State Street. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smead Value and State Street.
Diversification Opportunities for Smead Value and State Street
-0.04 | Correlation Coefficient |
Good diversification
The 3 months correlation between Smead and State is -0.04. Overlapping area represents the amount of risk that can be diversified away by holding Smead Value Fund and State Street Target in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on State Street Target 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 State Street. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of State Street Target has no effect on the direction of Smead Value i.e., Smead Value and State Street go up and down completely randomly.
Pair Corralation between Smead Value and State Street
Assuming the 90 days horizon Smead Value Fund is expected to under-perform the State Street. In addition to that, Smead Value is 2.9 times more volatile than State Street Target. It trades about -0.04 of its total potential returns per unit of risk. State Street Target is currently generating about 0.08 per unit of volatility. If you would invest 1,070 in State Street Target on December 27, 2024 and sell it today you would earn a total of 16.00 from holding State Street Target or generate 1.5% 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. State Street Target
Performance |
Timeline |
Smead Value Fund |
State Street Target |
Smead Value and State Street Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Smead Value and State Street
The main advantage of trading using opposite Smead Value and State Street positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smead Value position performs unexpectedly, State Street 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 State Street will offset losses from the drop in State Street's long position.Smead Value vs. Matthew 25 Fund | Smead Value vs. Baron Real Estate | Smead Value vs. Buffalo Emerging Opportunities | Smead Value vs. Eventide Gilead Fund |
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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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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