Correlation Between Northern Large and American Mutual

Specify exactly 2 symbols:
Can any of the company-specific risk be diversified away by investing in both Northern Large 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 Northern Large and American Mutual into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Northern Large Cap and American Mutual Fund, you can compare the effects of market volatilities on Northern Large 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 Northern Large with a short position of American Mutual. Check out your portfolio center. Please also check ongoing floating volatility patterns of Northern Large and American Mutual.

Diversification Opportunities for Northern Large and American Mutual

0.97
  Correlation Coefficient

Almost no diversification

The 3 months correlation between Northern and American is 0.97. Overlapping area represents the amount of risk that can be diversified away by holding NORTHERN LARGE CAP and AMERICAN MUTUAL FUND in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Mutual Fund and Northern Large 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 Northern Large Cap 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 Fund has no effect on the direction of Northern Large i.e., Northern Large and American Mutual go up and down completely randomly.

Pair Corralation between Northern Large and American Mutual

Assuming the 90 days horizon Northern Large Cap is expected to generate 1.22 times more return on investment than American Mutual. However, Northern Large is 1.22 times more volatile than American Mutual Fund. It trades about 0.03 of its potential returns per unit of risk. American Mutual Fund is currently generating about 0.03 per unit of risk. If you would invest  1,846  in Northern Large Cap on December 30, 2023 and sell it today you would earn a total of  287.00  from holding Northern Large Cap or generate 15.55% return on investment over 90 days.
Time Period3 Months [change]
DirectionMoves Together 
StrengthVery Strong
Accuracy100.0%
ValuesDaily Returns

NORTHERN LARGE CAP  vs.  AMERICAN MUTUAL FUND

 Performance 
       Timeline  
Northern Large Cap 

Risk-Adjusted Performance

19 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in Northern Large Cap are ranked lower than 19 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Northern Large may actually be approaching a critical reversion point that can send shares even higher in April 2024.
American Mutual Fund 

Risk-Adjusted Performance

17 of 100

 
Low
 
High
Solid
Compared to the overall equity markets, risk-adjusted returns on investments in American Mutual Fund are ranked lower than 17 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak technical and fundamental indicators, American Mutual may actually be approaching a critical reversion point that can send shares even higher in April 2024.

Northern Large and American Mutual Volatility Contrast

   Predicted Return Density   
       Returns  

Pair Trading with Northern Large and American Mutual

The main advantage of trading using opposite Northern Large and American Mutual positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Northern Large 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.
The idea behind Northern Large Cap and American Mutual Fund pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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 Odds Of Bankruptcy module to get analysis of equity chance of financial distress in the next 2 years.

Other Complementary Tools

Portfolio Rebalancing
Analyze risk-adjusted returns against different time horizons to find asset-allocation targets
Portfolio Diagnostics
Use generated alerts and portfolio events aggregator to diagnose current holdings
Risk-Return Analysis
View associations between returns expected from investment and the risk you assume
Portfolio Suggestion
Get suggestions outside of your existing asset allocation including your own model portfolios
ETF Categories
List of ETF categories grouped based on various criteria, such as the investment strategy or type of investments
Instant Ratings
Determine any equity ratings based on digital recommendations. Macroaxis instant equity ratings are based on combination of fundamental analysis and risk-adjusted market performance
Portfolio Backtesting
Avoid under-diversification and over-optimization by backtesting your portfolios
Price Ceiling Movement
Calculate and plot Price Ceiling Movement for different equity instruments
Portfolio Volatility
Check portfolio volatility and analyze historical return density to properly model market risk
Fundamentals Comparison
Compare fundamentals across multiple equities to find investing opportunities
Portfolio Dashboard
Portfolio dashboard that provides centralized access to all your investments