Correlation Between Capital Income and American Mutual
Can any of the company-specific risk be diversified away by investing in both Capital Income 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 Income 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 Income Builder and American Mutual Fund, you can compare the effects of market volatilities on Capital Income 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 Income with a short position of American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Capital Income and American Mutual.
Diversification Opportunities for Capital Income and American Mutual
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between CAPITAL and American is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Capital Income Builder 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 Income 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 Income Builder 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 Income i.e., Capital Income and American Mutual go up and down completely randomly.
Pair Corralation between Capital Income and American Mutual
Assuming the 90 days horizon Capital Income Builder is expected to generate 0.99 times more return on investment than American Mutual. However, Capital Income Builder is 1.01 times less risky than American Mutual. It trades about 0.26 of its potential returns per unit of risk. American Mutual Fund is currently generating about -0.05 per unit of risk. If you would invest 7,107 in Capital Income Builder on December 1, 2024 and sell it today you would earn a total of 175.00 from holding Capital Income Builder or generate 2.46% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Capital Income Builder vs. American Mutual Fund
Performance |
| Timeline |
| Capital Income Builder |
| American Mutual |
Capital Income and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Capital Income and American Mutual
The main advantage of trading using opposite Capital Income and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Capital Income 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 Income vs. Jpmorgan Emerging Markets | Capital Income vs. Hartford Schroders Emerging | Capital Income vs. Dodge Cox Emerging | Capital Income vs. Artisan Developing World |
| American Mutual vs. Touchstone Sands Capital | American Mutual vs. Templeton Growth Fund | American Mutual vs. The Hartford Growth | American Mutual vs. Rational Defensive 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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.
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