Correlation Between Amg Yacktman and Smead Value

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

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

Diversification Opportunities for Amg Yacktman and Smead Value

0.27

Correlation Coefficient

Amg Yacktman  Smead Value

Modest diversification

The 3 months correlation between Amg and Smead is 0.27. Overlapping area represents the amount of risk that can be diversified away by holding Amg Yacktman Focused and Smead Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Smead Value Fund and Amg Yacktman 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 Amg Yacktman Focused are associated (or correlated) with Smead Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Smead Value Fund has no effect on the direction of Amg Yacktman i.e., Amg Yacktman and Smead Value go up and down completely randomly.

Pair Corralation between Amg Yacktman and Smead Value

Assuming the 90 days horizon Amg Yacktman Focused is expected to generate 0.67 times more return on investment than Smead Value. However, Amg Yacktman Focused is 1.49 times less risky than Smead Value. It trades about 0.07 of its potential returns per unit of risk. Smead Value Fund is currently generating about -0.04 per unit of risk. If you would invest  1,858  in Amg Yacktman Focused on December 27, 2024 and sell it today you would earn a total of  48.00  from holding Amg Yacktman Focused or generate 2.58% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	98.36%
Values	Daily Returns

Amg Yacktman Focused  vs.  Smead Value Fund

Amg Yacktman Focused

Risk-Adjusted Performance

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Amg Yacktman Focused are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, Amg Yacktman is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

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.

Pair Trading with Amg Yacktman and Smead Value

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

The idea behind Amg Yacktman Focused and Smead Value 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 Idea Breakdown module to analyze constituents of all Macroaxis ideas. Macroaxis investment ideas are predefined, sector-focused investing themes.