Correlation Between American Mutual and Diamond Hill
Can any of the company-specific risk be diversified away by investing in both American Mutual and Diamond Hill 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 Diamond Hill 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 Diamond Hill Large, you can compare the effects of market volatilities on American Mutual and Diamond Hill 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 Diamond Hill. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Diamond Hill.
Diversification Opportunities for American Mutual and Diamond Hill
0.87 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Diamond is 0.87. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Diamond Hill Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Diamond Hill Large 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 Diamond Hill. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Diamond Hill Large has no effect on the direction of American Mutual i.e., American Mutual and Diamond Hill go up and down completely randomly.
Pair Corralation between American Mutual and Diamond Hill
Assuming the 90 days horizon American Mutual is expected to generate 1.25 times less return on investment than Diamond Hill. But when comparing it to its historical volatility, American Mutual Fund is 1.29 times less risky than Diamond Hill. It trades about 0.12 of its potential returns per unit of risk. Diamond Hill Large is currently generating about 0.12 of returns per unit of risk over similar time horizon. If you would invest 1,045 in Diamond Hill Large on August 31, 2024 and sell it today you would earn a total of 394.00 from holding Diamond Hill Large or generate 37.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
American Mutual Fund vs. Diamond Hill Large
Performance |
| Timeline |
| American Mutual |
| Diamond Hill Large |
American Mutual and Diamond Hill Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Diamond Hill
The main advantage of trading using opposite American Mutual and Diamond Hill positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Diamond Hill 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 Diamond Hill will offset losses from the drop in Diamond Hill's long position.| American Mutual vs. Calvert Moderate Allocation | American Mutual vs. Franklin Lifesmart Retirement | American Mutual vs. Franklin Lifesmart Retirement | American Mutual vs. Jp Morgan Smartretirement |
| Diamond Hill vs. Old Westbury Short Term | Diamond Hill vs. Goldman Sachs Short Term | Diamond Hill vs. Maryland Short Term Tax Free | Diamond Hill vs. Angel Oak Ultrashort |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
Other Complementary Tools
| Price Exposure Probability Analyze equity upside and downside potential for a given time horizon across multiple markets | |
| Portfolio Dashboard Portfolio dashboard that provides centralized access to all your investments | |
| Crypto Correlations Use cryptocurrency correlation module to diversify your cryptocurrency portfolio across multiple coins | |
| Performance Analysis Check effects of mean-variance optimization against your current asset allocation | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities |