Correlation Between American Mutual and Federated Kaufmann
Can any of the company-specific risk be diversified away by investing in both American Mutual and Federated Kaufmann 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 Federated Kaufmann 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 Federated Kaufmann Large, you can compare the effects of market volatilities on American Mutual and Federated Kaufmann 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 Federated Kaufmann. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Federated Kaufmann.
Diversification Opportunities for American Mutual and Federated Kaufmann
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between American and Federated is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Federated Kaufmann Large in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Federated Kaufmann Large 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 Federated Kaufmann. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Federated Kaufmann Large has no effect on the direction of American Mutual i.e., American Mutual and Federated Kaufmann go up and down completely randomly.
Pair Corralation between American Mutual and Federated Kaufmann
Assuming the 90 days horizon American Mutual Fund is expected to generate 0.54 times more return on investment than Federated Kaufmann. However, American Mutual Fund is 1.84 times less risky than Federated Kaufmann. It trades about 0.15 of its potential returns per unit of risk. Federated Kaufmann Large is currently generating about 0.07 per unit of risk. If you would invest 6,000 in American Mutual Fund on June 5, 2025 and sell it today you would earn a total of 76.00 from holding American Mutual Fund or generate 1.27% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Mutual Fund vs. Federated Kaufmann Large
Performance |
| Timeline |
| American Mutual |
| Federated Kaufmann Large |
American Mutual and Federated Kaufmann Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Federated Kaufmann
The main advantage of trading using opposite American Mutual and Federated Kaufmann positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Federated Kaufmann 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 Federated Kaufmann will offset losses from the drop in Federated Kaufmann's long position.| American Mutual vs. Amcap Fund Class | American Mutual vs. American Balanced Fund | American Mutual vs. New Perspective Fund | American Mutual vs. New World Fund |
| Federated Kaufmann vs. Franklin Federal Limited Term | Federated Kaufmann vs. Lord Abbett Short | Federated Kaufmann vs. Ab Select Longshort | Federated Kaufmann vs. Easterly Snow Longshort |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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