Correlation Between American Mutual and Mainstay Moderate
Can any of the company-specific risk be diversified away by investing in both American Mutual and Mainstay Moderate 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 Mainstay Moderate 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 Mainstay Moderate Allocation, you can compare the effects of market volatilities on American Mutual and Mainstay Moderate 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 Mainstay Moderate. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Mainstay Moderate.
Diversification Opportunities for American Mutual and Mainstay Moderate
0.81 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Mainstay is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Mainstay Moderate Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mainstay Moderate 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 Mainstay Moderate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mainstay Moderate has no effect on the direction of American Mutual i.e., American Mutual and Mainstay Moderate go up and down completely randomly.
Pair Corralation between American Mutual and Mainstay Moderate
Assuming the 90 days horizon American Mutual Fund is expected to generate 1.2 times more return on investment than Mainstay Moderate. However, American Mutual is 1.2 times more volatile than Mainstay Moderate Allocation. It trades about 0.07 of its potential returns per unit of risk. Mainstay Moderate Allocation is currently generating about 0.06 per unit of risk. If you would invest 4,703 in American Mutual Fund on November 27, 2024 and sell it today you would earn a total of 1,049 from holding American Mutual Fund or generate 22.3% 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. Mainstay Moderate Allocation
Performance |
| Timeline |
| American Mutual |
| Mainstay Moderate |
American Mutual and Mainstay Moderate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Mainstay Moderate
The main advantage of trading using opposite American Mutual and Mainstay Moderate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Mainstay Moderate 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 Mainstay Moderate will offset losses from the drop in Mainstay Moderate'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 |
| Mainstay Moderate vs. Blackrock Financial Institutions | Mainstay Moderate vs. John Hancock Financial | Mainstay Moderate vs. Fidelity Advisor Financial | Mainstay Moderate vs. Davis Financial 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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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