Correlation Between American Mutual and Edgar Lomax
Can any of the company-specific risk be diversified away by investing in both American Mutual and Edgar Lomax 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 Edgar Lomax 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 Edgar Lomax Value, you can compare the effects of market volatilities on American Mutual and Edgar Lomax 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 Edgar Lomax. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Edgar Lomax.
Diversification Opportunities for American Mutual and Edgar Lomax
0.97 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Edgar is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Edgar Lomax Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Edgar Lomax Value 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 Edgar Lomax. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Edgar Lomax Value has no effect on the direction of American Mutual i.e., American Mutual and Edgar Lomax go up and down completely randomly.
Pair Corralation between American Mutual and Edgar Lomax
Assuming the 90 days horizon American Mutual is expected to generate 1.9 times less return on investment than Edgar Lomax. But when comparing it to its historical volatility, American Mutual Fund is 1.3 times less risky than Edgar Lomax. It trades about 0.16 of its potential returns per unit of risk. Edgar Lomax Value is currently generating about 0.23 of returns per unit of risk over similar time horizon. If you would invest 1,575 in Edgar Lomax Value on August 31, 2024 and sell it today you would earn a total of 66.00 from holding Edgar Lomax Value or generate 4.19% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Mutual Fund vs. Edgar Lomax Value
Performance |
| Timeline |
| American Mutual |
| Edgar Lomax Value |
American Mutual and Edgar Lomax Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Edgar Lomax
The main advantage of trading using opposite American Mutual and Edgar Lomax positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Edgar Lomax 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 Edgar Lomax will offset losses from the drop in Edgar Lomax's long position.| American Mutual vs. Commonwealth Global Fund | American Mutual vs. Wisdomtree Siegel Global | American Mutual vs. Barings Global Floating | American Mutual vs. Kinetics Global Fund |
| Edgar Lomax vs. Nationwide Small Cap | Edgar Lomax vs. Nationwide International Index | Edgar Lomax vs. Nationwide Mid Cap | Edgar Lomax vs. Nationwide Sp 500 |
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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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