Correlation Between American Mutual and Pimco Rae

Can any of the company-specific risk be diversified away by investing in both American Mutual and Pimco Rae 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 Pimco Rae 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 Pimco Rae Plus, you can compare the effects of market volatilities on American Mutual and Pimco Rae 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 Pimco Rae. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Mutual and Pimco Rae.

Diversification Opportunities for American Mutual and Pimco Rae

0.98

Correlation Coefficient

American Mutual  Pimco Rae

Almost no diversification

The 3 months correlation between American and Pimco is 0.98. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Pimco Rae Plus in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pimco Rae Plus 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 Pimco Rae. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pimco Rae Plus has no effect on the direction of American Mutual i.e., American Mutual and Pimco Rae go up and down completely randomly.

Pair Corralation between American Mutual and Pimco Rae

Assuming the 90 days horizon American Mutual is expected to generate 1.15 times less return on investment than Pimco Rae. But when comparing it to its historical volatility, American Mutual Fund is 1.47 times less risky than Pimco Rae. It trades about 0.24 of its potential returns per unit of risk. Pimco Rae Plus is currently generating about 0.19 of returns per unit of risk over similar time horizon. If you would invest  1,768  in Pimco Rae Plus on May 6, 2025 and sell it today you would earn a total of  189.00  from holding Pimco Rae Plus or generate 10.69% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Strong
Accuracy	100.0%
Values	Daily Returns

American Mutual Fund  vs.  Pimco Rae Plus

American Mutual

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in American Mutual Fund are ranked lower than 18 (%) 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 September 2025.

Pimco Rae Plus

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Pimco Rae Plus are ranked lower than 14 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Pimco Rae may actually be approaching a critical reversion point that can send shares even higher in September 2025.

Pair Trading with American Mutual and Pimco Rae

The main advantage of trading using opposite American Mutual and Pimco Rae positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Mutual position performs unexpectedly, Pimco Rae 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 Pimco Rae will offset losses from the drop in Pimco Rae's long position.

The idea behind American Mutual Fund and Pimco Rae Plus 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.

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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 Commodity Channel module to use Commodity Channel Index to analyze current equity momentum.