Correlation Between American Mutual and Large Cap
Can any of the company-specific risk be diversified away by investing in both American Mutual and Large Cap 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 American Mutual and Large Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Mutual Fund and Large Cap E, you can compare the effects of market volatilities on American Mutual and Large Cap 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 American Mutual with a short position of Large Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Large Cap.
Diversification Opportunities for American Mutual and Large Cap
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Large is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Large Cap E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Large Cap E and American Mutual 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 American Mutual Fund are associated (or correlated) with Large Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Large Cap E has no effect on the direction of American Mutual i.e., American Mutual and Large Cap go up and down completely randomly.
Pair Corralation between American Mutual and Large Cap
Assuming the 90 days horizon American Mutual is expected to generate 1.26 times less return on investment than Large Cap. But when comparing it to its historical volatility, American Mutual Fund is 1.35 times less risky than Large Cap. It trades about 0.09 of its potential returns per unit of risk. Large Cap E is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 1,893 in Large Cap E on September 12, 2024 and sell it today you would earn a total of 735.00 from holding Large Cap E or generate 38.83% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Mutual Fund vs. Large Cap E
Performance |
| Timeline |
| American Mutual |
| Large Cap E |
American Mutual and Large Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Large Cap
The main advantage of trading using opposite American Mutual and Large Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Large Cap 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 Large Cap will offset losses from the drop in Large Cap's long position.| American Mutual vs. Multisector Bond Sma | American Mutual vs. Versatile Bond Portfolio | American Mutual vs. T Rowe Price | American Mutual vs. Franklin High Yield |
| Large Cap vs. Vanguard Value Index | Large Cap vs. Dodge Cox Stock | Large Cap vs. American Mutual Fund | Large Cap vs. American Funds American |
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 Sync Your Broker module to sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors..
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