Correlation Between American Mutual and Al Frank
Can any of the company-specific risk be diversified away by investing in both American Mutual and Al Frank 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 Al Frank 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 Al Frank Fund, you can compare the effects of market volatilities on American Mutual and Al Frank 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 Al Frank. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Al Frank.
Diversification Opportunities for American Mutual and Al Frank
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and VALAX is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Al Frank Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Al Frank Fund 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 Al Frank. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Al Frank Fund has no effect on the direction of American Mutual i.e., American Mutual and Al Frank go up and down completely randomly.
Pair Corralation between American Mutual and Al Frank
Assuming the 90 days horizon American Mutual is expected to generate 1.33 times less return on investment than Al Frank. But when comparing it to its historical volatility, American Mutual Fund is 1.46 times less risky than Al Frank. It trades about 0.33 of its potential returns per unit of risk. Al Frank Fund is currently generating about 0.3 of returns per unit of risk over similar time horizon. If you would invest 2,845 in Al Frank Fund on September 3, 2024 and sell it today you would earn a total of 153.00 from holding Al Frank Fund or generate 5.38% 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. Al Frank Fund
Performance |
| Timeline |
| American Mutual |
| Al Frank Fund |
American Mutual and Al Frank Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Al Frank
The main advantage of trading using opposite American Mutual and Al Frank positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Al Frank 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 Al Frank will offset losses from the drop in Al Frank's long position.| American Mutual vs. Dodge Cox Stock | American Mutual vs. American Funds American | American Mutual vs. American Funds American | American Mutual vs. American Mutual Fund |
| Al Frank vs. Financials Ultrasector Profund | Al Frank vs. 1919 Financial Services | Al Frank vs. Davis Financial Fund | Al Frank vs. Goldman Sachs Financial |
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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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