Correlation Between American Mutual and Strategic Bond
Can any of the company-specific risk be diversified away by investing in both American Mutual and Strategic Bond 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 Strategic Bond 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 Strategic Bond Fund, you can compare the effects of market volatilities on American Mutual and Strategic Bond 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 Strategic Bond. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Strategic Bond.
Diversification Opportunities for American Mutual and Strategic Bond
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Strategic is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Strategic Bond Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Strategic Bond 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 Strategic Bond. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Strategic Bond has no effect on the direction of American Mutual i.e., American Mutual and Strategic Bond go up and down completely randomly.
Pair Corralation between American Mutual and Strategic Bond
Assuming the 90 days horizon American Mutual Fund is expected to under-perform the Strategic Bond. In addition to that, American Mutual is 1.35 times more volatile than Strategic Bond Fund. It trades about -0.05 of its total potential returns per unit of risk. Strategic Bond Fund is currently generating about 0.3 per unit of volatility. If you would invest 896.00 in Strategic Bond Fund on December 1, 2024 and sell it today you would earn a total of 19.00 from holding Strategic Bond Fund or generate 2.12% 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. Strategic Bond Fund
Performance |
| Timeline |
| American Mutual |
| Strategic Bond |
American Mutual and Strategic Bond Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Strategic Bond
The main advantage of trading using opposite American Mutual and Strategic Bond positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Strategic Bond 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 Strategic Bond will offset losses from the drop in Strategic Bond'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 |
| Strategic Bond vs. Equity Growth Strategy | Strategic Bond vs. Equity Growth Strategy | Strategic Bond vs. Equity Growth Strategy | Strategic Bond vs. Emerging Markets 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 Portfolio Dashboard module to portfolio dashboard that provides centralized access to all your investments.
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