Correlation Between Global Gold and American Mutual
Can any of the company-specific risk be diversified away by investing in both Global Gold and American Mutual 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 Global Gold and American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Global Gold Fund and American Mutual Fund, you can compare the effects of market volatilities on Global Gold and American Mutual 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 Global Gold with a short position of American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Global Gold and American Mutual.
Diversification Opportunities for Global Gold and American Mutual
0.38 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Global and American is 0.38. Overlapping area represents the amount of risk that can be diversified away by holding Global Gold Fund and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual and Global Gold 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 Global Gold Fund are associated (or correlated) with American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Global Gold i.e., Global Gold and American Mutual go up and down completely randomly.
Pair Corralation between Global Gold and American Mutual
Assuming the 90 days horizon Global Gold Fund is expected to generate 2.86 times more return on investment than American Mutual. However, Global Gold is 2.86 times more volatile than American Mutual Fund. It trades about 0.04 of its potential returns per unit of risk. American Mutual Fund is currently generating about 0.06 per unit of risk. If you would invest 977.00 in Global Gold Fund on September 3, 2024 and sell it today you would earn a total of 309.00 from holding Global Gold Fund or generate 31.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Global Gold Fund vs. American Mutual Fund
Performance |
| Timeline |
| Global Gold Fund |
| American Mutual |
Global Gold and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Global Gold and American Mutual
The main advantage of trading using opposite Global Gold and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Global Gold position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual's long position.| Global Gold vs. Baird Smallmid Cap | Global Gold vs. The Hartford Small | Global Gold vs. Touchstone Small Cap | Global Gold vs. Small Cap Value |
| American Mutual vs. Franklin Gold Precious | American Mutual vs. Gabelli Gold Fund | American Mutual vs. Europac Gold Fund | American Mutual vs. Global Gold Fund |
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 Bollinger Bands module to use Bollinger Bands indicator to analyze target price for a given investing horizon.
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