Correlation Between American Mutual and Oakmark Select
Can any of the company-specific risk be diversified away by investing in both American Mutual and Oakmark Select 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 Oakmark Select 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 Oakmark Select, you can compare the effects of market volatilities on American Mutual and Oakmark Select 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 Oakmark Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Oakmark Select.
Diversification Opportunities for American Mutual and Oakmark Select
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Oakmark is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Oakmark Select in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Oakmark Select 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 Oakmark Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Oakmark Select has no effect on the direction of American Mutual i.e., American Mutual and Oakmark Select go up and down completely randomly.
Pair Corralation between American Mutual and Oakmark Select
Assuming the 90 days horizon American Mutual is expected to generate 1.23 times less return on investment than Oakmark Select. But when comparing it to its historical volatility, American Mutual Fund is 1.52 times less risky than Oakmark Select. It trades about 0.14 of its potential returns per unit of risk. Oakmark Select is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 7,072 in Oakmark Select on September 1, 2024 and sell it today you would earn a total of 1,397 from holding Oakmark Select or generate 19.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 99.47% |
| Values | Daily Returns |
American Mutual Fund vs. Oakmark Select
Performance |
| Timeline |
| American Mutual |
| Oakmark Select |
American Mutual and Oakmark Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Oakmark Select
The main advantage of trading using opposite American Mutual and Oakmark Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Oakmark Select 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 Oakmark Select will offset losses from the drop in Oakmark Select's long position.| American Mutual vs. Balanced Fund Investor | American Mutual vs. Qs Growth Fund | American Mutual vs. Shelton Funds | American Mutual vs. Small Cap Stock |
| Oakmark Select vs. T Rowe Price | Oakmark Select vs. T Rowe Price | Oakmark Select vs. Wasatch Global Opportunities | Oakmark Select vs. Federated Global Allocation |
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 Share Portfolio module to track or share privately all of your investments from the convenience of any device.
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