Correlation Between American Mutual and International Business
Can any of the company-specific risk be diversified away by investing in both American Mutual and International Business 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 American Mutual and International Business into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Mutual Fund and International Business Machines, you can compare the effects of market volatilities on American Mutual and International Business 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 American Mutual with a short position of International Business. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and International Business.
Diversification Opportunities for American Mutual and International Business
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between American and International is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding AMERICAN MUTUAL FUND and International Business Machine in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on International Business and American Mutual 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 American Mutual Fund are associated (or correlated) with International Business. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of International Business has no effect on the direction of American Mutual i.e., American Mutual and International Business go up and down completely randomly.
Pair Corralation between American Mutual and International Business
Assuming the 90 days horizon American Mutual is expected to generate 5.33 times less return on investment than International Business. But when comparing it to its historical volatility, American Mutual Fund is 1.57 times less risky than International Business. It trades about 0.02 of its potential returns per unit of risk. International Business Machines is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest 11,627 in International Business Machines on December 29, 2023 and sell it today you would earn a total of 7,453 from holding International Business Machines or generate 64.1% return on investment over 90 days.
Time Period | 3 Months [change] |
Direction | Moves Together |
Strength | Strong |
Accuracy | 100.0% |
Values | Daily Returns |
AMERICAN MUTUAL FUND vs. International Business Machine
Performance |
Timeline |
American Mutual Fund |
International Business |
American Mutual and International Business Volatility Contrast
Predicted Return Density |
Returns |
Pair Trading with American Mutual and International Business
The main advantage of trading using opposite American Mutual and International Business positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, International Business 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 International Business will offset losses from the drop in International Business' long position.American Mutual vs. State Farm Growth | American Mutual vs. Income Fund Of | American Mutual vs. American Funds 2015 | American Mutual vs. New World Fund |
International Business vs. NextTrip | International Business vs. Clarivate Plc | International Business vs. JPMorgan Chase Co | International Business vs. Deckers Outdoor |
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 Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.
Other Complementary Tools
Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
Premium Stories Follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope | |
ETF Categories List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments | |
AI Portfolio Architect Use AI to generate optimal portfolios and find profitable investment opportunities | |
FinTech Suite Use AI to screen and filter profitable investment opportunities | |
Sync Your Broker Sync your existing holdings, watchlists, positions or portfolios from thousands of online brokerage services, banks, investment account aggregators and robo-advisors. | |
Equity Valuation Check real value of public entities based on technical and fundamental data | |
Commodity Directory Find actively traded commodities issued by global exchanges | |
Headlines Timeline Stay connected to all market stories and filter out noise. Drill down to analyze hype elasticity | |
Balance Of Power Check stock momentum by analyzing Balance Of Power indicator and other technical ratios | |
Stocks Directory Find actively traded stocks across global markets |