Correlation Between American Funds and American Mutual
Can any of the company-specific risk be diversified away by investing in both American Funds and American Mutual 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 Funds and American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Funds Strategic and American Mutual Fund, you can compare the effects of market volatilities on American Funds and American Mutual 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 Funds with a short position of American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Funds and American Mutual.
Diversification Opportunities for American Funds and American Mutual
-0.46 | Correlation Coefficient |
Very good diversification
The 3 months correlation between American and American is -0.46. Overlapping area represents the amount of risk that can be diversified away by holding American Funds Strategic and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual and American Funds 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 Funds Strategic are associated (or correlated) with American Mutual. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Mutual has no effect on the direction of American Funds i.e., American Funds and American Mutual go up and down completely randomly.
Pair Corralation between American Funds and American Mutual
Assuming the 90 days horizon American Funds is expected to generate 17.87 times less return on investment than American Mutual. But when comparing it to its historical volatility, American Funds Strategic is 1.36 times less risky than American Mutual. It trades about 0.01 of its potential returns per unit of risk. American Mutual Fund is currently generating about 0.09 of returns per unit of risk over similar time horizon. If you would invest 4,640 in American Mutual Fund on August 27, 2024 and sell it today you would earn a total of 1,355 from holding American Mutual Fund or generate 29.2% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Funds Strategic vs. American Mutual Fund
Performance |
| Timeline |
| American Funds Strategic |
| American Mutual |
American Funds and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Funds and American Mutual
The main advantage of trading using opposite American Funds and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Funds position performs unexpectedly, American Mutual 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 American Mutual will offset losses from the drop in American Mutual's long position.| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual Fund |
| American Mutual vs. Touchstone Ultra Short | American Mutual vs. Astor Longshort Fund | American Mutual vs. Vanguard Institutional Short Term | American Mutual 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 Watchlist Optimization module to optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm.
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