Correlation Between American Mutual and Teton Westwood
Can any of the company-specific risk be diversified away by investing in both American Mutual and Teton Westwood 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 Teton Westwood 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 Teton Westwood Equity, you can compare the effects of market volatilities on American Mutual and Teton Westwood 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 Teton Westwood. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Teton Westwood.
Diversification Opportunities for American Mutual and Teton Westwood
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and TETON is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Teton Westwood Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Teton Westwood Equity 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 Teton Westwood. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Teton Westwood Equity has no effect on the direction of American Mutual i.e., American Mutual and Teton Westwood go up and down completely randomly.
Pair Corralation between American Mutual and Teton Westwood
Assuming the 90 days horizon American Mutual Fund is expected to generate 0.87 times more return on investment than Teton Westwood. However, American Mutual Fund is 1.15 times less risky than Teton Westwood. It trades about 0.31 of its potential returns per unit of risk. Teton Westwood Equity is currently generating about 0.17 per unit of risk. If you would invest 5,634 in American Mutual Fund on November 18, 2024 and sell it today you would earn a total of 173.00 from holding American Mutual Fund or generate 3.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Mutual Fund vs. Teton Westwood Equity
Performance |
| Timeline |
| American Mutual |
| Teton Westwood Equity |
American Mutual and Teton Westwood Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Teton Westwood
The main advantage of trading using opposite American Mutual and Teton Westwood positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Teton Westwood 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 Teton Westwood will offset losses from the drop in Teton Westwood's long position.| American Mutual vs. Palm Valley Capital | American Mutual vs. Ab Small Cap | American Mutual vs. Applied Finance Explorer | American Mutual vs. American Century Etf |
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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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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