Correlation Between American Mutual and Thornburg Developing
Can any of the company-specific risk be diversified away by investing in both American Mutual and Thornburg Developing 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 Thornburg Developing 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 Thornburg Developing World, you can compare the effects of market volatilities on American Mutual and Thornburg Developing 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 Thornburg Developing. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Thornburg Developing.
Diversification Opportunities for American Mutual and Thornburg Developing
0.1 | Correlation Coefficient |
Average diversification
The 3 months correlation between American and Thornburg is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Thornburg Developing World in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Thornburg Developing 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 Thornburg Developing. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Thornburg Developing has no effect on the direction of American Mutual i.e., American Mutual and Thornburg Developing go up and down completely randomly.
Pair Corralation between American Mutual and Thornburg Developing
Assuming the 90 days horizon American Mutual Fund is expected to under-perform the Thornburg Developing. But the mutual fund apears to be less risky and, when comparing its historical volatility, American Mutual Fund is 1.24 times less risky than Thornburg Developing. The mutual fund trades about -0.05 of its potential returns per unit of risk. The Thornburg Developing World is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 2,239 in Thornburg Developing World on September 15, 2024 and sell it today you would earn a total of 62.00 from holding Thornburg Developing World or generate 2.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Mutual Fund vs. Thornburg Developing World
Performance |
| Timeline |
| American Mutual |
| Thornburg Developing |
American Mutual and Thornburg Developing Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Thornburg Developing
The main advantage of trading using opposite American Mutual and Thornburg Developing positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Thornburg Developing 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 Thornburg Developing will offset losses from the drop in Thornburg Developing'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 |
| Thornburg Developing vs. Jhancock Disciplined Value | Thornburg Developing vs. Virtus Nfj Large Cap | Thornburg Developing vs. Transamerica Large Cap | Thornburg Developing vs. American Mutual 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 Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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