Correlation Between American Mutual and Pace Large
Can any of the company-specific risk be diversified away by investing in both American Mutual and Pace Large 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 Pace Large 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 Pace Large Value, you can compare the effects of market volatilities on American Mutual and Pace Large 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 Pace Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Pace Large.
Diversification Opportunities for American Mutual and Pace Large
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Pace is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Pace Large Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pace Large Value 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 Pace Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pace Large Value has no effect on the direction of American Mutual i.e., American Mutual and Pace Large go up and down completely randomly.
Pair Corralation between American Mutual and Pace Large
Assuming the 90 days horizon American Mutual Fund is expected to generate 0.86 times more return on investment than Pace Large. However, American Mutual Fund is 1.17 times less risky than Pace Large. It trades about 0.17 of its potential returns per unit of risk. Pace Large Value is currently generating about 0.13 per unit of risk. If you would invest 5,309 in American Mutual Fund on September 1, 2024 and sell it today you would earn a total of 694.00 from holding American Mutual Fund or generate 13.07% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.21% |
| Values | Daily Returns |
American Mutual Fund vs. Pace Large Value
Performance |
| Timeline |
| American Mutual |
| Pace Large Value |
American Mutual and Pace Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Pace Large
The main advantage of trading using opposite American Mutual and Pace Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Pace Large 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 Pace Large will offset losses from the drop in Pace Large'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 Sign In To Macroaxis module to sign in to explore Macroaxis' wealth optimization platform and fintech modules.
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