Correlation Between American Mutual and Columbia Select
Can any of the company-specific risk be diversified away by investing in both American Mutual and Columbia Select 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 Columbia Select 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 Columbia Select Large Cap, you can compare the effects of market volatilities on American Mutual and Columbia Select 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 Columbia Select. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Columbia Select.
Diversification Opportunities for American Mutual and Columbia Select
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Columbia is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Columbia Select Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Select 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 Columbia Select. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Select Large has no effect on the direction of American Mutual i.e., American Mutual and Columbia Select go up and down completely randomly.
Pair Corralation between American Mutual and Columbia Select
Assuming the 90 days horizon American Mutual Fund is expected to generate 0.67 times more return on investment than Columbia Select. However, American Mutual Fund is 1.5 times less risky than Columbia Select. It trades about 0.08 of its potential returns per unit of risk. Columbia Select Large Cap is currently generating about 0.04 per unit of risk. If you would invest 5,784 in American Mutual Fund on September 12, 2024 and sell it today you would earn a total of 153.00 from holding American Mutual Fund or generate 2.65% 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. Columbia Select Large Cap
Performance |
| Timeline |
| American Mutual |
| Columbia Select Large |
American Mutual and Columbia Select Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Columbia Select
The main advantage of trading using opposite American Mutual and Columbia Select positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Columbia Select 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 Columbia Select will offset losses from the drop in Columbia Select'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 |
| Columbia Select vs. Vanguard Value Index | Columbia Select vs. Dodge Cox Stock | Columbia Select vs. American Mutual Fund | Columbia Select 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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