Correlation Between Amcap Fund and American Mutual
Can any of the company-specific risk be diversified away by investing in both Amcap Fund and American Mutual 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 Amcap Fund and American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Amcap Fund Class and American Mutual Fund, you can compare the effects of market volatilities on Amcap Fund and American Mutual 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 Amcap Fund with a short position of American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Amcap Fund and American Mutual.
Diversification Opportunities for Amcap Fund and American Mutual
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Amcap and American is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Amcap Fund Class and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual and Amcap Fund 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 Amcap Fund Class are associated (or correlated) with American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of Amcap Fund i.e., Amcap Fund and American Mutual go up and down completely randomly.
Pair Corralation between Amcap Fund and American Mutual
Assuming the 90 days horizon Amcap Fund Class is expected to generate 1.48 times more return on investment than American Mutual. However, Amcap Fund is 1.48 times more volatile than American Mutual Fund. It trades about 0.09 of its potential returns per unit of risk. American Mutual Fund is currently generating about 0.09 per unit of risk. If you would invest 3,020 in Amcap Fund Class on August 27, 2024 and sell it today you would earn a total of 1,468 from holding Amcap Fund Class or generate 48.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Amcap Fund Class vs. American Mutual Fund
Performance |
| Timeline |
| Amcap Fund Class |
| American Mutual |
Amcap Fund and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Amcap Fund and American Mutual
The main advantage of trading using opposite Amcap Fund and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Amcap Fund position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual's long position.| Amcap Fund vs. Europacific Growth Fund | Amcap Fund vs. Capital World Growth | Amcap Fund vs. Washington Mutual Investors | Amcap Fund vs. American Mutual Fund |
| American Mutual vs. Small Pany Growth | American Mutual vs. The Hartford Small | American Mutual vs. Touchstone Small Cap | American Mutual vs. Ab Small Cap |
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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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