Correlation Between American Mutual and Selected American
Can any of the company-specific risk be diversified away by investing in both American Mutual and Selected American 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 Selected American 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 Selected American Shares, you can compare the effects of market volatilities on American Mutual and Selected American 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 Selected American. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Selected American.
Diversification Opportunities for American Mutual and Selected American
0.49 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between American and Selected is 0.49. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Selected American Shares in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Selected American Shares 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 Selected American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Selected American Shares has no effect on the direction of American Mutual i.e., American Mutual and Selected American go up and down completely randomly.
Pair Corralation between American Mutual and Selected American
Assuming the 90 days horizon American Mutual is expected to generate 1.85 times less return on investment than Selected American. But when comparing it to its historical volatility, American Mutual Fund is 1.58 times less risky than Selected American. It trades about 0.14 of its potential returns per unit of risk. Selected American Shares is currently generating about 0.16 of returns per unit of risk over similar time horizon. If you would invest 3,701 in Selected American Shares on June 12, 2025 and sell it today you would earn a total of 277.00 from holding Selected American Shares or generate 7.48% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Mutual Fund vs. Selected American Shares
Performance |
| Timeline |
| American Mutual |
| Selected American Shares |
American Mutual and Selected American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Selected American
The main advantage of trading using opposite American Mutual and Selected American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Selected American 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 Selected American will offset losses from the drop in Selected American's long position.| American Mutual vs. Income Fund Of | American Mutual vs. American Funds 2015 | American Mutual vs. New World Fund | American Mutual vs. American Funds Income |
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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 Performance Analysis module to check effects of mean-variance optimization against your current asset allocation.
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