Correlation Between American Mutual and Alger Small

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

Diversification Opportunities for American Mutual and Alger Small

0.0

Correlation Coefficient

American Mutual  Alger Small

Pay attention - limited upside

The 3 months correlation between American and Alger is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Alger Small Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Alger Small Cap 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 Alger Small. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Alger Small Cap has no effect on the direction of American Mutual i.e., American Mutual and Alger Small go up and down completely randomly.

Pair Corralation between American Mutual and Alger Small

If you would invest  5,735  in American Mutual Fund on September 4, 2024 and sell it today you would earn a total of  289.00  from holding American Mutual Fund or generate 5.04% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	1.59%
Values	Daily Returns

American Mutual Fund  vs.  Alger Small Cap

American Mutual

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in American Mutual Fund are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong technical and fundamental indicators, American Mutual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Alger Small Cap

Risk-Adjusted Performance

0 of 100

Solid

Over the last 90 days Alger Small Cap has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong basic indicators, Alger Small 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 Alger Small

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

The idea behind American Mutual Fund and Alger Small Cap 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 Fundamental Analysis module to view fundamental data based on most recent published financial statements.