Correlation Between American Mutual and Balanced Fund

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

Diversification Opportunities for American Mutual and Balanced Fund

0.99

Correlation Coefficient

American Mutual  Balanced Fund

No risk reduction

The 3 months correlation between American and Balanced is 0.99. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Balanced Fund Adviser in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Balanced Fund Adviser 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 Balanced Fund. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Balanced Fund Adviser has no effect on the direction of American Mutual i.e., American Mutual and Balanced Fund go up and down completely randomly.

Pair Corralation between American Mutual and Balanced Fund

Assuming the 90 days horizon American Mutual Fund is expected to generate 1.28 times more return on investment than Balanced Fund. However, American Mutual is 1.28 times more volatile than Balanced Fund Adviser. It trades about 0.24 of its potential returns per unit of risk. Balanced Fund Adviser is currently generating about 0.21 per unit of risk. If you would invest  5,529  in American Mutual Fund on May 4, 2025 and sell it today you would earn a total of  491.00  from holding American Mutual Fund or generate 8.88% 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.  Balanced Fund Adviser

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.

Balanced Fund Adviser

Risk-Adjusted Performance

Solid

Compared to the overall equity markets, risk-adjusted returns on investments in Balanced Fund Adviser are ranked lower than 16 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Balanced Fund is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with American Mutual and Balanced Fund

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

The idea behind American Mutual Fund and Balanced Fund Adviser 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 Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.