Correlation Between American Mutual and Gabelli Growth
Can any of the company-specific risk be diversified away by investing in both American Mutual and Gabelli Growth 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 Gabelli Growth 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 The Gabelli Growth, you can compare the effects of market volatilities on American Mutual and Gabelli Growth 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 Gabelli Growth. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Gabelli Growth.
Diversification Opportunities for American Mutual and Gabelli Growth
0.83 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Gabelli is 0.83. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and The Gabelli Growth in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gabelli Growth 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 Gabelli Growth. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gabelli Growth has no effect on the direction of American Mutual i.e., American Mutual and Gabelli Growth go up and down completely randomly.
Pair Corralation between American Mutual and Gabelli Growth
Assuming the 90 days horizon American Mutual is expected to generate 2.5 times less return on investment than Gabelli Growth. But when comparing it to its historical volatility, American Mutual Fund is 1.91 times less risky than Gabelli Growth. It trades about 0.08 of its potential returns per unit of risk. The Gabelli Growth is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 6,698 in The Gabelli Growth on August 29, 2024 and sell it today you would earn a total of 5,671 from holding The Gabelli Growth or generate 84.67% 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. The Gabelli Growth
Performance |
| Timeline |
| American Mutual |
| Gabelli Growth |
American Mutual and Gabelli Growth Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Gabelli Growth
The main advantage of trading using opposite American Mutual and Gabelli Growth positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Gabelli Growth 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 Gabelli Growth will offset losses from the drop in Gabelli Growth'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 |
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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 Technical Analysis module to check basic technical indicators and analysis based on most latest market data.
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