Correlation Between Capital World and American Mutual
Can any of the company-specific risk be diversified away by investing in both Capital World 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 Capital World and American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Capital World Growth and American Mutual Fund, you can compare the effects of market volatilities on Capital World 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 Capital World with a short position of American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital World and American Mutual.
Diversification Opportunities for Capital World and American Mutual
0.89 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Capital and American is 0.89. Overlapping area represents the amount of risk that can be diversified away by holding Capital World Growth and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual and Capital World 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 Capital World Growth 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 Capital World i.e., Capital World and American Mutual go up and down completely randomly.
Pair Corralation between Capital World and American Mutual
Assuming the 90 days horizon Capital World is expected to generate 1.11 times less return on investment than American Mutual. In addition to that, Capital World is 1.29 times more volatile than American Mutual Fund. It trades about 0.1 of its total potential returns per unit of risk. American Mutual Fund is currently generating about 0.15 per unit of volatility. 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 Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital World Growth vs. American Mutual Fund
Performance |
| Timeline |
| Capital World Growth |
| American Mutual |
Capital World and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital World and American Mutual
The main advantage of trading using opposite Capital World and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital World 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.| Capital World vs. Income Fund Of | Capital World vs. New World Fund | Capital World vs. American Mutual Fund | Capital World vs. American Mutual Fund |
| 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.
Other Complementary Tools
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Equity Analysis Research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. | |
| Earnings Calls Check upcoming earnings announcements updated hourly across public exchanges | |
| USA ETFs Find actively traded Exchange Traded Funds (ETF) in USA |