Correlation Between American Mutual and Permanent Portfolio
Can any of the company-specific risk be diversified away by investing in both American Mutual and Permanent Portfolio 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 Permanent Portfolio 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 Permanent Portfolio Class, you can compare the effects of market volatilities on American Mutual and Permanent Portfolio 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 Permanent Portfolio. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Permanent Portfolio.
Diversification Opportunities for American Mutual and Permanent Portfolio
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Permanent is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Permanent Portfolio Class in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Permanent Portfolio Class 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 Permanent Portfolio. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Permanent Portfolio Class has no effect on the direction of American Mutual i.e., American Mutual and Permanent Portfolio go up and down completely randomly.
Pair Corralation between American Mutual and Permanent Portfolio
Assuming the 90 days horizon American Mutual is expected to generate 2.12 times less return on investment than Permanent Portfolio. In addition to that, American Mutual is 1.09 times more volatile than Permanent Portfolio Class. It trades about 0.12 of its total potential returns per unit of risk. Permanent Portfolio Class is currently generating about 0.28 per unit of volatility. If you would invest 5,970 in Permanent Portfolio Class on August 28, 2024 and sell it today you would earn a total of 205.00 from holding Permanent Portfolio Class or generate 3.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 95.45% |
| Values | Daily Returns |
American Mutual Fund vs. Permanent Portfolio Class
Performance |
| Timeline |
| American Mutual |
| Permanent Portfolio Class |
American Mutual and Permanent Portfolio Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Permanent Portfolio
The main advantage of trading using opposite American Mutual and Permanent Portfolio positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Permanent Portfolio 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 Permanent Portfolio will offset losses from the drop in Permanent Portfolio'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 |
| Permanent Portfolio vs. The Fairholme Fund | Permanent Portfolio vs. Fpa Crescent Fund | Permanent Portfolio vs. Amg Yacktman Fund | Permanent Portfolio vs. Hussman Strategic Total |
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 Global Correlations module to find global opportunities by holding instruments from different markets.
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