Correlation Between American Mutual and Vela Large
Can any of the company-specific risk be diversified away by investing in both American Mutual and Vela 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 Vela 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 Vela Large Cap, you can compare the effects of market volatilities on American Mutual and Vela 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 Vela Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Vela Large.
Diversification Opportunities for American Mutual and Vela Large
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Vela is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Vela Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Vela Large Cap 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 Vela Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Vela Large Cap has no effect on the direction of American Mutual i.e., American Mutual and Vela Large go up and down completely randomly.
Pair Corralation between American Mutual and Vela Large
Assuming the 90 days horizon American Mutual Fund is expected to generate 1.1 times more return on investment than Vela Large. However, American Mutual is 1.1 times more volatile than Vela Large Cap. It trades about 0.12 of its potential returns per unit of risk. Vela Large Cap is currently generating about 0.13 per unit of risk. If you would invest 4,703 in American Mutual Fund on September 12, 2024 and sell it today you would earn a total of 1,220 from holding American Mutual Fund or generate 25.94% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Mutual Fund vs. Vela Large Cap
Performance |
| Timeline |
| American Mutual |
| Vela Large Cap |
American Mutual and Vela Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Vela Large
The main advantage of trading using opposite American Mutual and Vela Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Vela 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 Vela Large will offset losses from the drop in Vela 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 |
| Vela Large vs. T Rowe Price | Vela Large vs. Artisan High Income | Vela Large vs. Doubleline Yield Opportunities | Vela Large vs. Versatile Bond Portfolio |
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 Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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