Correlation Between Multi Manager and American Mutual
Can any of the company-specific risk be diversified away by investing in both Multi Manager 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 Multi Manager and American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Manager High Yield and American Mutual Fund, you can compare the effects of market volatilities on Multi Manager 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 Multi Manager with a short position of American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Manager and American Mutual.
Diversification Opportunities for Multi Manager and American Mutual
0.77 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Multi and American is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Multi Manager High Yield and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual and Multi Manager 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 Multi Manager High Yield 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 Multi Manager i.e., Multi Manager and American Mutual go up and down completely randomly.
Pair Corralation between Multi Manager and American Mutual
Assuming the 90 days horizon Multi Manager is expected to generate 2.51 times less return on investment than American Mutual. But when comparing it to its historical volatility, Multi Manager High Yield is 4.25 times less risky than American Mutual. It trades about 0.28 of its potential returns per unit of risk. American Mutual Fund is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest 5,379 in American Mutual Fund on September 3, 2024 and sell it today you would earn a total of 680.00 from holding American Mutual Fund or generate 12.64% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Manager High Yield vs. American Mutual Fund
Performance |
| Timeline |
| Multi Manager High |
| American Mutual |
Multi Manager and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Manager and American Mutual
The main advantage of trading using opposite Multi Manager and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Manager 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.| Multi Manager vs. Intermediate Term Tax Free Bond | Multi Manager vs. Federated Pennsylvania Municipal | Multi Manager vs. Ishares Municipal Bond | Multi Manager vs. Morningstar Municipal Bond |
| American Mutual vs. Ab Global Risk | American Mutual vs. Needham Aggressive Growth | American Mutual vs. Lgm Risk Managed | American Mutual vs. Morningstar Aggressive Growth |
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 Cryptocurrency Center module to build and monitor diversified portfolio of extremely risky digital assets and cryptocurrency.
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