Correlation Between Advanced Micro and Smead Value

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

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

Diversification Opportunities for Advanced Micro and Smead Value

-0.19

Correlation Coefficient

Advanced Micro  Smead Value

Good diversification

The 3 months correlation between Advanced and Smead is -0.19. Overlapping area represents the amount of risk that can be diversified away by holding Advanced Micro Devices 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 Advanced Micro 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 Advanced Micro Devices 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 Advanced Micro i.e., Advanced Micro and Smead Value go up and down completely randomly.

Pair Corralation between Advanced Micro and Smead Value

Considering the 90-day investment horizon Advanced Micro is expected to generate 2.6 times less return on investment than Smead Value. In addition to that, Advanced Micro is 3.87 times more volatile than Smead Value Fund. It trades about 0.01 of its total potential returns per unit of risk. Smead Value Fund is currently generating about 0.13 per unit of volatility. If you would invest  7,783  in Smead Value Fund on February 19, 2024 and sell it today you would earn a total of  524.00  from holding Smead Value Fund or generate 6.73% return on investment over 90 days.

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

Advanced Micro Devices  vs.  Smead Value Fund

Advanced Micro Devices

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Advanced Micro Devices has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound primary indicators, Advanced Micro is not utilizing all of its potentials. The recent stock price tumult, may contribute to shorter-term losses for the shareholders.

Smead Value Fund

Risk-Adjusted Performance

9 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Smead Value Fund are ranked lower than 9 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Smead Value may actually be approaching a critical reversion point that can send shares even higher in June 2024.

Pair Trading with Advanced Micro and Smead Value

The main advantage of trading using opposite Advanced Micro and Smead Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Advanced Micro 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 Advanced Micro Devices 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 ETFs module to find actively traded Exchange Traded Funds (ETF) from around the world.