Correlation Between Mutual Of and Floating Rate
Can any of the company-specific risk be diversified away by investing in both Mutual Of and Floating Rate 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 Floating Rate 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 Floating Rate Fund, you can compare the effects of market volatilities on Mutual Of and Floating Rate 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 Floating Rate. Check out your portfolio center. Please also check ongoing floating volatility patterns of Mutual Of and Floating Rate.
Diversification Opportunities for Mutual Of and Floating Rate
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Mutual and Floating is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Mutual Of America and Floating Rate Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Floating Rate 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 Floating Rate. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Floating Rate has no effect on the direction of Mutual Of i.e., Mutual Of and Floating Rate go up and down completely randomly.
Pair Corralation between Mutual Of and Floating Rate
Assuming the 90 days horizon Mutual Of America is expected to generate 29.18 times more return on investment than Floating Rate. However, Mutual Of is 29.18 times more volatile than Floating Rate Fund. It trades about 0.27 of its potential returns per unit of risk. Floating Rate Fund is currently generating about 0.3 per unit of risk. If you would invest 1,495 in Mutual Of America on September 5, 2024 and sell it today you would earn a total of 146.00 from holding Mutual Of America or generate 9.77% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Mutual Of America vs. Floating Rate Fund
Performance |
| Timeline |
| Mutual Of America |
| Floating Rate |
Mutual Of and Floating Rate Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Mutual Of and Floating Rate
The main advantage of trading using opposite Mutual Of and Floating Rate positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Mutual Of position performs unexpectedly, Floating Rate 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 Floating Rate will offset losses from the drop in Floating Rate's long position.| Mutual Of vs. Mutual Of America | Mutual Of vs. Mutual Of America | Mutual Of vs. Mutual Of America | Mutual Of vs. Mutual Of America |
| Floating Rate vs. Lord Abbett Inflation | Floating Rate vs. T Rowe Price | Floating Rate vs. Asg Managed Futures | Floating Rate vs. American Funds Inflation |
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 Balance Of Power module to check stock momentum by analyzing Balance Of Power indicator and other technical ratios.
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