Correlation Between American Mutual and Cambiar Opportunity
Can any of the company-specific risk be diversified away by investing in both American Mutual and Cambiar Opportunity 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 Cambiar Opportunity 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 Cambiar Opportunity Fund, you can compare the effects of market volatilities on American Mutual and Cambiar Opportunity 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 Cambiar Opportunity. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Cambiar Opportunity.
Diversification Opportunities for American Mutual and Cambiar Opportunity
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Cambiar is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Cambiar Opportunity Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cambiar Opportunity 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 Cambiar Opportunity. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cambiar Opportunity has no effect on the direction of American Mutual i.e., American Mutual and Cambiar Opportunity go up and down completely randomly.
Pair Corralation between American Mutual and Cambiar Opportunity
Assuming the 90 days horizon American Mutual Fund is expected to generate 0.53 times more return on investment than Cambiar Opportunity. However, American Mutual Fund is 1.89 times less risky than Cambiar Opportunity. It trades about 0.09 of its potential returns per unit of risk. Cambiar Opportunity Fund is currently generating about 0.05 per unit of risk. If you would invest 4,655 in American Mutual Fund on August 30, 2024 and sell it today you would earn a total of 1,383 from holding American Mutual Fund or generate 29.71% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Mutual Fund vs. Cambiar Opportunity Fund
Performance |
| Timeline |
| American Mutual |
| Cambiar Opportunity |
American Mutual and Cambiar Opportunity Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Cambiar Opportunity
The main advantage of trading using opposite American Mutual and Cambiar Opportunity positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Cambiar Opportunity 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 Cambiar Opportunity will offset losses from the drop in Cambiar Opportunity's long position.| American Mutual vs. Multisector Bond Sma | American Mutual vs. Sterling Capital Short | American Mutual vs. Nebraska Municipal Fund | American Mutual vs. Artisan High Income |
| Cambiar Opportunity vs. Dodge Cox Stock | Cambiar Opportunity vs. American Mutual Fund | Cambiar Opportunity vs. American Funds American | Cambiar Opportunity vs. American Funds American |
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 Markets Map module to get a quick overview of global market snapshot using zoomable world map. Drill down to check world indexes.
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