Correlation Between Smead Value and Amana Developing
Can any of the company-specific risk be diversified away by investing in both Smead Value and Amana Developing 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 Amana Developing 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 Amana Developing World, you can compare the effects of market volatilities on Smead Value and Amana Developing 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 Amana Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of Smead Value and Amana Developing.
Diversification Opportunities for Smead Value and Amana Developing
0.59 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Smead and Amana is 0.59. Overlapping area represents the amount of risk that can be diversified away by holding Smead Value Fund and Amana Developing World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Amana Developing World 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 Amana Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Amana Developing World has no effect on the direction of Smead Value i.e., Smead Value and Amana Developing go up and down completely randomly.
Pair Corralation between Smead Value and Amana Developing
Assuming the 90 days horizon Smead Value is expected to generate 1.39 times less return on investment than Amana Developing. In addition to that, Smead Value is 1.13 times more volatile than Amana Developing World. It trades about 0.07 of its total potential returns per unit of risk. Amana Developing World is currently generating about 0.11 per unit of volatility. If you would invest 1,282 in Amana Developing World on February 23, 2024 and sell it today you would earn a total of 69.00 from holding Amana Developing World or generate 5.38% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Weak |
Accuracy | 100.0% |
Values | Daily Returns |
Smead Value Fund vs. Amana Developing World
Performance |
Timeline |
Smead Value Fund |
Amana Developing World |
Smead Value and Amana Developing Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with Smead Value and Amana Developing
The main advantage of trading using opposite Smead Value and Amana Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Smead Value position performs unexpectedly, Amana Developing 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 Amana Developing will offset losses from the drop in Amana Developing's long position.Smead Value vs. Vanguard Value Index | Smead Value vs. Dodge Cox Stock | Smead Value vs. American Mutual Fund | Smead Value vs. American Mutual Fund |
Amana Developing vs. Vanguard Emerging Markets | Amana Developing vs. Vanguard Emerging Markets | Amana Developing vs. American Funds New | Amana Developing vs. New World Fund |
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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.
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