Correlation Between American Mutual and Frost Kempner
Can any of the company-specific risk be diversified away by investing in both American Mutual and Frost Kempner 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 Frost Kempner 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 Frost Kempner Multi Cap, you can compare the effects of market volatilities on American Mutual and Frost Kempner 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 Frost Kempner. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Frost Kempner.
Diversification Opportunities for American Mutual and Frost Kempner
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Frost is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Frost Kempner Multi Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Frost Kempner Multi 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 Frost Kempner. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Frost Kempner Multi has no effect on the direction of American Mutual i.e., American Mutual and Frost Kempner go up and down completely randomly.
Pair Corralation between American Mutual and Frost Kempner
Assuming the 90 days horizon American Mutual is expected to generate 1.02 times less return on investment than Frost Kempner. But when comparing it to its historical volatility, American Mutual Fund is 1.22 times less risky than Frost Kempner. It trades about 0.29 of its potential returns per unit of risk. Frost Kempner Multi Cap is currently generating about 0.24 of returns per unit of risk over similar time horizon. If you would invest 1,228 in Frost Kempner Multi Cap on September 4, 2024 and sell it today you would earn a total of 46.00 from holding Frost Kempner Multi Cap or generate 3.75% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Mutual Fund vs. Frost Kempner Multi Cap
Performance |
| Timeline |
| American Mutual |
| Frost Kempner Multi |
American Mutual and Frost Kempner Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Frost Kempner
The main advantage of trading using opposite American Mutual and Frost Kempner positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Frost Kempner 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 Frost Kempner will offset losses from the drop in Frost Kempner's long position.| American Mutual vs. Rational Defensive Growth | American Mutual vs. Pace Smallmedium Growth | American Mutual vs. Pace Large Growth | American Mutual vs. L Abbett Growth |
| Frost Kempner vs. Frost Kempner Multi Cap | Frost Kempner vs. Brokerage And Investment | Frost Kempner vs. Nationwide Mid Cap | Frost Kempner 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.
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