Correlation Between Smead Value and American Mutual

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

Diversification Opportunities for Smead Value and American Mutual

0.0
  Correlation Coefficient

Pay attention - limited upside

The 1 month correlation between Smead and American is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding SMEAD VALUE FUND and AMERICAN MUTUAL FUND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual 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 American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual Fund has no effect on the direction of Smead Value i.e., Smead Value and American Mutual go up and down completely randomly.

Pair Corralation between Smead Value and American Mutual

If you would invest  6,717  in Smead Value Fund on December 29, 2023 and sell it today you would earn a total of  1,745  from holding Smead Value Fund or generate 25.98% return on investment over 90 days.
Time Period1 Month [change]
DirectionFlat 
StrengthInsignificant
Accuracy0.0%
ValuesDaily Returns

SMEAD VALUE FUND  vs.  AMERICAN MUTUAL FUND

 Performance 
       Timeline  
Smead Value Fund 

Risk-Adjusted Performance

37 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Smead Value Fund are ranked lower than 37 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Smead Value showed solid returns over the last few months and may actually be approaching a breakup point.
American Mutual Fund 

Risk-Adjusted Performance

0 of 100

 
Low
 
High
Strong
Over the last 90 days American Mutual Fund has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, American Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Smead Value and American Mutual Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Smead Value and American Mutual

The main advantage of trading using opposite Smead Value and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smead Value position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual's long position.
The idea behind Smead Value Fund and American Mutual 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 Equity Forecasting module to use basic forecasting models to generate price predictions and determine price momentum.

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