Correlation Between Smead International and Elfun Diversified

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

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

Diversification Opportunities for Smead International and Elfun Diversified

0.14

Correlation Coefficient

Smead International  Elfun Diversified

Average diversification

The 3 months correlation between Smead and Elfun is 0.14. Overlapping area represents the amount of risk that can be diversified away by holding Smead International Value and Elfun Diversified Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Elfun Diversified and Smead International 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 International Value are associated (or correlated) with Elfun Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Elfun Diversified has no effect on the direction of Smead International i.e., Smead International and Elfun Diversified go up and down completely randomly.

Pair Corralation between Smead International and Elfun Diversified

Assuming the 90 days horizon Smead International Value is expected to generate 1.87 times more return on investment than Elfun Diversified. However, Smead International is 1.87 times more volatile than Elfun Diversified Fund. It trades about 0.17 of its potential returns per unit of risk. Elfun Diversified Fund is currently generating about 0.05 per unit of risk. If you would invest  5,473  in Smead International Value on December 28, 2024 and sell it today you would earn a total of  559.00  from holding Smead International Value or generate 10.21% return on investment over 90 days.

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

Smead International Value  vs.  Elfun Diversified Fund

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 basic indicators, Smead International may actually be approaching a critical reversion point that can send shares even higher in April 2025.

Elfun Diversified

Risk-Adjusted Performance

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Elfun Diversified Fund are ranked lower than 3 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Elfun Diversified 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 International and Elfun Diversified

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

The idea behind Smead International Value and Elfun Diversified 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.

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 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.