Correlation Between American Mutual and Westwood Largecap
Can any of the company-specific risk be diversified away by investing in both American Mutual and Westwood Largecap 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 Westwood Largecap 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 Westwood Largecap Value, you can compare the effects of market volatilities on American Mutual and Westwood Largecap 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 Westwood Largecap. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Westwood Largecap.
Diversification Opportunities for American Mutual and Westwood Largecap
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Westwood is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Westwood Largecap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Westwood Largecap 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 Westwood Largecap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Westwood Largecap Value has no effect on the direction of American Mutual i.e., American Mutual and Westwood Largecap go up and down completely randomly.
Pair Corralation between American Mutual and Westwood Largecap
Assuming the 90 days horizon American Mutual is expected to generate 2.2 times less return on investment than Westwood Largecap. But when comparing it to its historical volatility, American Mutual Fund is 1.37 times less risky than Westwood Largecap. It trades about 0.16 of its potential returns per unit of risk. Westwood Largecap Value is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 1,476 in Westwood Largecap Value on August 31, 2024 and sell it today you would earn a total of 72.00 from holding Westwood Largecap Value or generate 4.88% 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. Westwood Largecap Value
Performance |
| Timeline |
| American Mutual |
| Westwood Largecap Value |
American Mutual and Westwood Largecap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Westwood Largecap
The main advantage of trading using opposite American Mutual and Westwood Largecap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Westwood Largecap 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 Westwood Largecap will offset losses from the drop in Westwood Largecap'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 |
| Westwood Largecap vs. Ab Global Risk | Westwood Largecap vs. Scharf Global Opportunity | Westwood Largecap vs. Pimco Global Multi Asset | Westwood Largecap vs. Wasatch Global Opportunities |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
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