Correlation Between American Mutual and Nationwide Investor
Can any of the company-specific risk be diversified away by investing in both American Mutual and Nationwide Investor 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 Nationwide Investor 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 Nationwide Investor Destinations, you can compare the effects of market volatilities on American Mutual and Nationwide Investor 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 Nationwide Investor. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Nationwide Investor.
Diversification Opportunities for American Mutual and Nationwide Investor
0.88 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Nationwide is 0.88. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Nationwide Investor Destinatio in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Nationwide Investor 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 Nationwide Investor. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Nationwide Investor has no effect on the direction of American Mutual i.e., American Mutual and Nationwide Investor go up and down completely randomly.
Pair Corralation between American Mutual and Nationwide Investor
Assuming the 90 days horizon American Mutual is expected to generate 1.05 times less return on investment than Nationwide Investor. In addition to that, American Mutual is 1.08 times more volatile than Nationwide Investor Destinations. It trades about 0.32 of its total potential returns per unit of risk. Nationwide Investor Destinations is currently generating about 0.37 per unit of volatility. If you would invest 1,039 in Nationwide Investor Destinations on September 4, 2024 and sell it today you would earn a total of 46.00 from holding Nationwide Investor Destinations or generate 4.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.24% |
| Values | Daily Returns |
American Mutual Fund vs. Nationwide Investor Destinatio
Performance |
| Timeline |
| American Mutual |
| Nationwide Investor |
American Mutual and Nationwide Investor Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Nationwide Investor
The main advantage of trading using opposite American Mutual and Nationwide Investor positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Nationwide Investor 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 Nationwide Investor will offset losses from the drop in Nationwide Investor'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 |
| Nationwide Investor vs. Nationwide Investor Destinations | Nationwide Investor vs. Nationwide Investor Destinations | Nationwide Investor vs. Nationwide Investor Destinations |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
Other Complementary Tools
| Portfolio Backtesting Avoid under-diversification and over-optimization by backtesting your portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Positions Ratings 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 | |
| Equity Forecasting Use basic forecasting models to generate price predictions and determine price momentum | |
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories |