Correlation Between American Mutual and Great West
Can any of the company-specific risk be diversified away by investing in both American Mutual and Great West 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 Great West 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 Great West Lifetime 2020, you can compare the effects of market volatilities on American Mutual and Great West 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 Great West. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Great West.
Diversification Opportunities for American Mutual and Great West
0.68 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Great is 0.68. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Great West Lifetime 2020 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Great West Lifetime 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 Great West. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Great West Lifetime has no effect on the direction of American Mutual i.e., American Mutual and Great West go up and down completely randomly.
Pair Corralation between American Mutual and Great West
Assuming the 90 days horizon American Mutual Fund is expected to under-perform the Great West. In addition to that, American Mutual is 1.85 times more volatile than Great West Lifetime 2020. It trades about -0.09 of its total potential returns per unit of risk. Great West Lifetime 2020 is currently generating about 0.19 per unit of volatility. If you would invest 1,068 in Great West Lifetime 2020 on September 14, 2024 and sell it today you would earn a total of 10.00 from holding Great West Lifetime 2020 or generate 0.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Mutual Fund vs. Great West Lifetime 2020
Performance |
| Timeline |
| American Mutual |
| Great West Lifetime |
American Mutual and Great West Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Great West
The main advantage of trading using opposite American Mutual and Great West positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Great West 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 Great West will offset losses from the drop in Great West'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 |
| Great West vs. Americafirst Large Cap | Great West vs. Qs Large Cap | Great West vs. American Mutual Fund | Great West vs. Pace Large Value |
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 Instant Ratings module to determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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