Correlation Between American Mutual and Us Government
Can any of the company-specific risk be diversified away by investing in both American Mutual and Us Government 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 Us Government 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 Us Government Securities, you can compare the effects of market volatilities on American Mutual and Us Government 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 Us Government. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Us Government.
Diversification Opportunities for American Mutual and Us Government
-0.51 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and AMUSX is -0.51. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Us Government Securities in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Us Government Securities 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 Us Government. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Us Government Securities has no effect on the direction of American Mutual i.e., American Mutual and Us Government go up and down completely randomly.
Pair Corralation between American Mutual and Us Government
Assuming the 90 days horizon American Mutual Fund is expected to generate 1.41 times more return on investment than Us Government. However, American Mutual is 1.41 times more volatile than Us Government Securities. It trades about 0.08 of its potential returns per unit of risk. Us Government Securities is currently generating about 0.01 per unit of risk. If you would invest 4,638 in American Mutual Fund on August 27, 2024 and sell it today you would earn a total of 1,324 from holding American Mutual Fund or generate 28.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Mutual Fund vs. Us Government Securities
Performance |
| Timeline |
| American Mutual |
| Us Government Securities |
American Mutual and Us Government Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Us Government
The main advantage of trading using opposite American Mutual and Us Government positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Us Government 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 Us Government will offset losses from the drop in Us Government's long position.| American Mutual vs. Amcap Fund Class | American Mutual vs. American Balanced Fund | American Mutual vs. New Perspective Fund | American Mutual vs. New World Fund |
| Us Government vs. Bond Fund Of | Us Government vs. Capital World Bond | Us Government vs. American Mutual Fund | Us Government vs. Smallcap World 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 Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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