Correlation Between American Mutual and Huber Capital
Can any of the company-specific risk be diversified away by investing in both American Mutual and Huber Capital 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 Huber Capital 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 Huber Capital Equity, you can compare the effects of market volatilities on American Mutual and Huber Capital 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 Huber Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Huber Capital.
Diversification Opportunities for American Mutual and Huber Capital
0.85 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and Huber is 0.85. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Huber Capital Equity in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Huber Capital Equity 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 Huber Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Huber Capital Equity has no effect on the direction of American Mutual i.e., American Mutual and Huber Capital go up and down completely randomly.
Pair Corralation between American Mutual and Huber Capital
Assuming the 90 days horizon American Mutual is expected to generate 1.28 times less return on investment than Huber Capital. But when comparing it to its historical volatility, American Mutual Fund is 1.39 times less risky than Huber Capital. It trades about 0.1 of its potential returns per unit of risk. Huber Capital Equity is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 2,654 in Huber Capital Equity on September 12, 2024 and sell it today you would earn a total of 758.00 from holding Huber Capital Equity or generate 28.56% 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. Huber Capital Equity
Performance |
| Timeline |
| American Mutual |
| Huber Capital Equity |
American Mutual and Huber Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Huber Capital
The main advantage of trading using opposite American Mutual and Huber Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Huber Capital 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 Huber Capital will offset losses from the drop in Huber Capital's long position.| American Mutual vs. Gabelli Global Financial | American Mutual vs. Blackrock Financial Institutions | American Mutual vs. Transamerica Financial Life | American Mutual vs. Mesirow Financial Small |
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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 Options Analysis module to analyze and evaluate options and option chains as a potential hedge for your portfolios.
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