Correlation Between American Mutual and Boston Partners
Can any of the company-specific risk be diversified away by investing in both American Mutual and Boston Partners 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 Boston Partners 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 Boston Partners All Cap, you can compare the effects of market volatilities on American Mutual and Boston Partners 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 Boston Partners. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Boston Partners.
Diversification Opportunities for American Mutual and Boston Partners
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and BOSTON is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Boston Partners All Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Boston Partners All 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 Boston Partners. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Boston Partners All has no effect on the direction of American Mutual i.e., American Mutual and Boston Partners go up and down completely randomly.
Pair Corralation between American Mutual and Boston Partners
Assuming the 90 days horizon American Mutual is expected to generate 1.56 times less return on investment than Boston Partners. But when comparing it to its historical volatility, American Mutual Fund is 1.54 times less risky than Boston Partners. It trades about 0.24 of its potential returns per unit of risk. Boston Partners All Cap is currently generating about 0.25 of returns per unit of risk over similar time horizon. If you would invest 3,365 in Boston Partners All Cap on September 1, 2024 and sell it today you would earn a total of 165.00 from holding Boston Partners All Cap or generate 4.9% 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. Boston Partners All Cap
Performance |
| Timeline |
| American Mutual |
| Boston Partners All |
American Mutual and Boston Partners Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Boston Partners
The main advantage of trading using opposite American Mutual and Boston Partners positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Boston Partners 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 Boston Partners will offset losses from the drop in Boston Partners' 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 |
| Boston Partners vs. Boston Partners All Cap | Boston Partners vs. Parnassus Equity Incme | Boston Partners vs. Boston Partners Small | Boston Partners vs. Diamond Hill Large |
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 Price Exposure Probability module to analyze equity upside and downside potential for a given time horizon across multiple markets.
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