Correlation Between Spring Valley and Smead International

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

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

Diversification Opportunities for Spring Valley and Smead International

0.36

Correlation Coefficient

Spring Valley  Smead International

Weak diversification

The 3 months correlation between Spring and Smead is 0.36. Overlapping area represents the amount of risk that can be diversified away by holding Spring Valley Acquisition 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 Spring Valley 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 Spring Valley Acquisition 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 Spring Valley i.e., Spring Valley and Smead International go up and down completely randomly.

Pair Corralation between Spring Valley and Smead International

Given the investment horizon of 90 days Spring Valley Acquisition is expected to generate 0.09 times more return on investment than Smead International. However, Spring Valley Acquisition is 10.76 times less risky than Smead International. It trades about 0.23 of its potential returns per unit of risk. Smead International Value is currently generating about -0.1 per unit of risk. If you would invest  1,121  in Spring Valley Acquisition on October 9, 2024 and sell it today you would earn a total of  5.00  from holding Spring Valley Acquisition or generate 0.45% return on investment over 90 days.

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

Spring Valley Acquisition  vs.  Smead International Value

Spring Valley Acquisition

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Spring Valley Acquisition has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Spring Valley is not utilizing all of its potentials. The current stock price confusion, may contribute to short-horizon losses for the traders.

Smead International Value

Risk-Adjusted Performance

0 of 100

Very Weak

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

The main advantage of trading using opposite Spring Valley and Smead International positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Spring Valley 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 Spring Valley Acquisition 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 FinTech Suite module to use AI to screen and filter profitable investment opportunities.