Correlation Between New Economy and American Mutual
Can any of the company-specific risk be diversified away by investing in both New Economy 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 New Economy and American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between New Economy Fund and American Mutual Fund, you can compare the effects of market volatilities on New Economy 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 New Economy with a short position of American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of New Economy and American Mutual.
Diversification Opportunities for New Economy and American Mutual
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between New and American is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding New Economy Fund and American Mutual Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual and New Economy 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 New Economy Fund 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 New Economy i.e., New Economy and American Mutual go up and down completely randomly.
Pair Corralation between New Economy and American Mutual
Assuming the 90 days horizon New Economy Fund is expected to generate 1.73 times more return on investment than American Mutual. However, New Economy is 1.73 times more volatile than American Mutual Fund. It trades about 0.1 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 5,271 in New Economy Fund on August 25, 2024 and sell it today you would earn a total of 1,363 from holding New Economy Fund or generate 25.86% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
New Economy Fund vs. American Mutual Fund
Performance |
| Timeline |
| New Economy Fund |
| American Mutual |
New Economy and American Mutual Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with New Economy and American Mutual
The main advantage of trading using opposite New Economy and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if New Economy 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.| New Economy vs. Eip Growth And | New Economy vs. Mid Cap Growth | New Economy vs. Ab Centrated Growth | New Economy vs. Pioneer Fundamental Growth |
| American Mutual vs. Maryland Short Term Tax Free | American Mutual vs. Jhancock Short Duration | American Mutual vs. Angel Oak Ultrashort | American Mutual vs. Rbc Short Duration |
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 Pair Correlation module to compare performance and examine fundamental relationship between any two equity instruments.
Other Complementary Tools
| Volatility Analysis Get historical volatility and risk analysis based on latest market data | |
| Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
| Options Analysis Analyze and evaluate options and option chains as a potential hedge for your portfolios | |
| Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
| Stock Screener Find equities using a custom stock filter or screen asymmetry in trading patterns, price, volume, or investment outlook. |