Correlation Between Bond Fund and American Mutual
Can any of the company-specific risk be diversified away by investing in both Bond Fund 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 Bond Fund and American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Bond Fund Of and American Mutual Fund, you can compare the effects of market volatilities on Bond Fund 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 Bond Fund with a short position of American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bond Fund and American Mutual.
Diversification Opportunities for Bond Fund and American Mutual
-0.5 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Bond and American is -0.5. Overlapping area represents the amount of risk that can be diversified away by holding Bond Fund Of and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual and Bond Fund 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 Bond Fund Of 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 Bond Fund i.e., Bond Fund and American Mutual go up and down completely randomly.
Pair Corralation between Bond Fund and American Mutual
Assuming the 90 days horizon Bond Fund is expected to generate 5.41 times less return on investment than American Mutual. But when comparing it to its historical volatility, Bond Fund Of is 1.56 times less risky than American Mutual. It trades about 0.04 of its potential returns per unit of risk. American Mutual Fund is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 4,849 in American Mutual Fund on August 27, 2024 and sell it today you would earn a total of 1,113 from holding American Mutual Fund or generate 22.95% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Bond Fund Of vs. American Mutual Fund
Performance |
| Timeline |
| Bond Fund |
| American Mutual |
Bond Fund and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Bond Fund and American Mutual
The main advantage of trading using opposite Bond Fund and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Bond Fund 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.| Bond Fund vs. American High Income | Bond Fund vs. Europacific Growth Fund | Bond Fund vs. Capital World Bond | Bond Fund vs. Growth Fund Of |
| American Mutual vs. Amcap Fund Class | American Mutual vs. American Balanced Fund | American Mutual vs. New Perspective Fund | American Mutual vs. New World Fund |
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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