Correlation Between American Mutual and American Balanced
Can any of the company-specific risk be diversified away by investing in both American Mutual and American Balanced 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 American Balanced 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 American Balanced Fund, you can compare the effects of market volatilities on American Mutual and American Balanced 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 American Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and American Balanced.
Diversification Opportunities for American Mutual and American Balanced
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and American is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and American Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Balanced 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 American Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Balanced has no effect on the direction of American Mutual i.e., American Mutual and American Balanced go up and down completely randomly.
Pair Corralation between American Mutual and American Balanced
Assuming the 90 days horizon American Mutual is expected to generate 1.42 times less return on investment than American Balanced. In addition to that, American Mutual is 1.18 times more volatile than American Balanced Fund. It trades about 0.06 of its total potential returns per unit of risk. American Balanced Fund is currently generating about 0.1 per unit of volatility. If you would invest 2,818 in American Balanced Fund on August 25, 2024 and sell it today you would earn a total of 833.00 from holding American Balanced Fund or generate 29.56% 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. American Balanced Fund
Performance |
| Timeline |
| American Mutual |
| American Balanced |
American Mutual and American Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and American Balanced
The main advantage of trading using opposite American Mutual and American Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, American Balanced 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 Balanced will offset losses from the drop in American Balanced's long position.| American Mutual vs. Maryland Short Term Tax Free | American Mutual vs. Jhancock Short Duration | American Mutual vs. Angel Oak Ultrashort | American Mutual vs. Rbc Short Duration |
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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 My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.
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