Correlation Between American Mutual and Largecap Value
Can any of the company-specific risk be diversified away by investing in both American Mutual and Largecap Value 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 Largecap Value 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 Largecap Value Fund, you can compare the effects of market volatilities on American Mutual and Largecap Value 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 Largecap Value. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Largecap Value.
Diversification Opportunities for American Mutual and Largecap Value
0.94 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Largecap is 0.94. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Largecap Value Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Largecap Value 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 Largecap Value. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Largecap Value has no effect on the direction of American Mutual i.e., American Mutual and Largecap Value go up and down completely randomly.
Pair Corralation between American Mutual and Largecap Value
Assuming the 90 days horizon American Mutual is expected to generate 1.28 times less return on investment than Largecap Value. But when comparing it to its historical volatility, American Mutual Fund is 1.34 times less risky than Largecap Value. It trades about 0.2 of its potential returns per unit of risk. Largecap Value Fund is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest 1,891 in Largecap Value Fund on May 29, 2025 and sell it today you would earn a total of 146.00 from holding Largecap Value Fund or generate 7.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 98.41% |
| Values | Daily Returns |
American Mutual Fund vs. Largecap Value Fund
Performance |
| Timeline |
| American Mutual |
| Largecap Value |
American Mutual and Largecap Value Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Mutual and Largecap Value
The main advantage of trading using opposite American Mutual and Largecap Value positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Largecap Value 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 Largecap Value will offset losses from the drop in Largecap Value's long position.| American Mutual vs. Jpmorgan Diversified Fund | American Mutual vs. Wilmington Diversified Income | American Mutual vs. Aqr Diversified Arbitrage | American Mutual vs. Mfs Diversified 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 Theme Ratings module to determine theme ratings based on digital equity recommendations. Macroaxis theme ratings are based on combination of fundamental analysis and risk-adjusted market performance.
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