Correlation Between Mutual Of and Small Cap
Can any of the company-specific risk be diversified away by investing in both Mutual Of and Small Cap 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 Mutual Of and Small Cap into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Mutual Of America and Small Cap Value, you can compare the effects of market volatilities on Mutual Of and Small Cap 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 Mutual Of with a short position of Small Cap. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mutual Of and Small Cap.
Diversification Opportunities for Mutual Of and Small Cap
Almost no diversification
The 3 months correlation between Mutual and Small is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding Mutual Of America and Small Cap Value in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Small Cap Value and Mutual Of 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 Mutual Of America are associated (or correlated) with Small Cap. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Small Cap Value has no effect on the direction of Mutual Of i.e., Mutual Of and Small Cap go up and down completely randomly.
Pair Corralation between Mutual Of and Small Cap
Assuming the 90 days horizon Mutual Of America is expected to generate 1.01 times more return on investment than Small Cap. However, Mutual Of is 1.01 times more volatile than Small Cap Value. It trades about 0.05 of its potential returns per unit of risk. Small Cap Value is currently generating about 0.05 per unit of risk. If you would invest 1,241 in Mutual Of America on September 12, 2024 and sell it today you would earn a total of 375.00 from holding Mutual Of America or generate 30.22% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 99.8% |
| Values | Daily Returns |
Mutual Of America vs. Small Cap Value
Performance |
| Timeline |
| Mutual Of America |
| Small Cap Value |
Mutual Of and Small Cap Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mutual Of and Small Cap
The main advantage of trading using opposite Mutual Of and Small Cap positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mutual Of position performs unexpectedly, Small Cap 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 Small Cap will offset losses from the drop in Small Cap's long position.| Mutual Of vs. Blackrock Inflation Protected | Mutual Of vs. American Funds Inflation | Mutual Of vs. Atac Inflation Rotation | Mutual Of vs. Ab Bond Inflation |
| Small Cap vs. Royce Opportunity Fund | Small Cap vs. Great West Loomis Sayles | Small Cap vs. Valic Company I | Small Cap vs. Mutual Of America |
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 Correlation Analysis module to reduce portfolio risk simply by holding instruments which are not perfectly correlated.
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