Correlation Between American Mutual and Wilmington Diversified
Can any of the company-specific risk be diversified away by investing in both American Mutual and Wilmington Diversified 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 Wilmington Diversified 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 Wilmington Diversified Income, you can compare the effects of market volatilities on American Mutual and Wilmington Diversified 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 Wilmington Diversified. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Wilmington Diversified.
Diversification Opportunities for American Mutual and Wilmington Diversified
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Wilmington is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Wilmington Diversified Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Wilmington Diversified 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 Wilmington Diversified. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Wilmington Diversified has no effect on the direction of American Mutual i.e., American Mutual and Wilmington Diversified go up and down completely randomly.
Pair Corralation between American Mutual and Wilmington Diversified
Assuming the 90 days horizon American Mutual is expected to generate 1.05 times less return on investment than Wilmington Diversified. But when comparing it to its historical volatility, American Mutual Fund is 1.2 times less risky than Wilmington Diversified. It trades about 0.12 of its potential returns per unit of risk. Wilmington Diversified Income is currently generating about 0.1 of returns per unit of risk over similar time horizon. If you would invest 1,082 in Wilmington Diversified Income on August 29, 2024 and sell it today you would earn a total of 327.00 from holding Wilmington Diversified Income or generate 30.22% 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. Wilmington Diversified Income
Performance |
| Timeline |
| American Mutual |
| Wilmington Diversified |
American Mutual and Wilmington Diversified Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Wilmington Diversified
The main advantage of trading using opposite American Mutual and Wilmington Diversified positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Wilmington Diversified 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 Wilmington Diversified will offset losses from the drop in Wilmington Diversified's long position.| American Mutual vs. Dws Government Money | American Mutual vs. Nuveen All American Municipal | American Mutual vs. Oklahoma Municipal Fund | American Mutual vs. Vanguard Short Term Government |
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 Portfolio Suggestion module to get suggestions outside of your existing asset allocation including your own model portfolios.
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