Correlation Between Small Pany and American Mutual
Can any of the company-specific risk be diversified away by investing in both Small Pany 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 Small Pany and American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Small Pany Growth and American Mutual Fund, you can compare the effects of market volatilities on Small Pany 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 Small Pany with a short position of American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Small Pany and American Mutual.
Diversification Opportunities for Small Pany and American Mutual
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Small and American is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Small Pany 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 Small Pany 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 Small Pany 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 Small Pany i.e., Small Pany and American Mutual go up and down completely randomly.
Pair Corralation between Small Pany and American Mutual
Assuming the 90 days horizon Small Pany Growth is expected to generate 3.23 times more return on investment than American Mutual. However, Small Pany is 3.23 times more volatile than American Mutual Fund. It trades about 0.35 of its potential returns per unit of risk. American Mutual Fund is currently generating about 0.14 per unit of risk. If you would invest 1,120 in Small Pany Growth on August 31, 2024 and sell it today you would earn a total of 522.00 from holding Small Pany Growth or generate 46.61% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Small Pany Growth vs. American Mutual Fund
Performance |
| Timeline |
| Small Pany Growth |
| American Mutual |
Small Pany and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Small Pany and American Mutual
The main advantage of trading using opposite Small Pany and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Small Pany 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.| Small Pany vs. The Hartford Midcap | Small Pany vs. Mfs Emerging Markets | Small Pany vs. Wells Fargo Special | Small Pany vs. Baron Emerging Markets |
| American Mutual vs. Calvert Moderate Allocation | American Mutual vs. Franklin Lifesmart Retirement | American Mutual vs. Franklin Lifesmart Retirement | American Mutual vs. Jp Morgan Smartretirement |
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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