Correlation Between American Mutual and Western Asset
Can any of the company-specific risk be diversified away by investing in both American Mutual and Western Asset 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 Western Asset 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 Western Asset E, you can compare the effects of market volatilities on American Mutual and Western Asset 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 Western Asset. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Western Asset.
Diversification Opportunities for American Mutual and Western Asset
-0.53 | Correlation Coefficient |
Excellent diversification
The 3 months correlation between American and Western is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Western Asset E in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Western Asset E 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 Western Asset. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Western Asset E has no effect on the direction of American Mutual i.e., American Mutual and Western Asset go up and down completely randomly.
Pair Corralation between American Mutual and Western Asset
Assuming the 90 days horizon American Mutual Fund is expected to generate 1.66 times more return on investment than Western Asset. However, American Mutual is 1.66 times more volatile than Western Asset E. It trades about 0.28 of its potential returns per unit of risk. Western Asset E is currently generating about 0.2 per unit of risk. If you would invest 5,814 in American Mutual Fund on September 2, 2024 and sell it today you would earn a total of 210.00 from holding American Mutual Fund or generate 3.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Mutual Fund vs. Western Asset E
Performance |
| Timeline |
| American Mutual |
| Western Asset E |
American Mutual and Western Asset Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Western Asset
The main advantage of trading using opposite American Mutual and Western Asset positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Western Asset 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 Western Asset will offset losses from the drop in Western Asset'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 |
| Western Asset vs. Transamerica Large Cap | Western Asset vs. Qs Large Cap | Western Asset vs. Fidelity Series 1000 | Western Asset 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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
Other Complementary Tools
| Portfolio Center All portfolio management and optimization tools to improve performance of your portfolios | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Portfolio Volatility Check portfolio volatility and analyze historical return density to properly model market risk | |
| Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon |