Correlation Between American Mutual and Champlain Mid
Can any of the company-specific risk be diversified away by investing in both American Mutual and Champlain Mid 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 Champlain Mid 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 Champlain Mid Cap, you can compare the effects of market volatilities on American Mutual and Champlain Mid 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 Champlain Mid. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Champlain Mid.
Diversification Opportunities for American Mutual and Champlain Mid
0.79 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Champlain is 0.79. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Champlain Mid Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Champlain Mid 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 Champlain Mid. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Champlain Mid Cap has no effect on the direction of American Mutual i.e., American Mutual and Champlain Mid go up and down completely randomly.
Pair Corralation between American Mutual and Champlain Mid
Assuming the 90 days horizon American Mutual is expected to generate 4.68 times less return on investment than Champlain Mid. But when comparing it to its historical volatility, American Mutual Fund is 1.47 times less risky than Champlain Mid. It trades about 0.12 of its potential returns per unit of risk. Champlain Mid Cap is currently generating about 0.38 of returns per unit of risk over similar time horizon. If you would invest 2,424 in Champlain Mid Cap on August 28, 2024 and sell it today you would earn a total of 196.00 from holding Champlain Mid Cap or generate 8.09% 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. Champlain Mid Cap
Performance |
| Timeline |
| American Mutual |
| Champlain Mid Cap |
American Mutual and Champlain Mid Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Champlain Mid
The main advantage of trading using opposite American Mutual and Champlain Mid positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Champlain Mid 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 Champlain Mid will offset losses from the drop in Champlain Mid's long position.| American Mutual vs. Pace Smallmedium Growth | American Mutual vs. L Abbett Growth | American Mutual vs. Champlain Mid Cap | American Mutual vs. Franklin Growth Opportunities |
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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 Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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