Correlation Between American Mutual and Pioneer Strategic

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

Diversification Opportunities for American Mutual and Pioneer Strategic

0.81

Correlation Coefficient

American Mutual  Pioneer Strategic

Very poor diversification

The 3 months correlation between American and Pioneer is 0.81. Overlapping area represents the amount of risk that can be diversified away by holding American Mutual Fund and Pioneer Strategic Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Pioneer Strategic Income 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 Pioneer Strategic. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Pioneer Strategic Income has no effect on the direction of American Mutual i.e., American Mutual and Pioneer Strategic go up and down completely randomly.

Pair Corralation between American Mutual and Pioneer Strategic

Assuming the 90 days horizon American Mutual Fund is expected to generate 1.57 times more return on investment than Pioneer Strategic. However, American Mutual is 1.57 times more volatile than Pioneer Strategic Income. It trades about 0.08 of its potential returns per unit of risk. Pioneer Strategic Income is currently generating about 0.07 per unit of risk. If you would invest  4,488  in American Mutual Fund on December 4, 2024 and sell it today you would earn a total of  1,287  from holding American Mutual Fund or generate 28.68% return on investment over 90 days.

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

American Mutual Fund  vs.  Pioneer Strategic Income

American Mutual

Risk-Adjusted Performance

Very Weak

Over the last 90 days American Mutual Fund has generated negative risk-adjusted returns adding no value to fund investors. 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.

Pioneer Strategic Income

Risk-Adjusted Performance

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Pioneer Strategic Income are ranked lower than 5 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly strong basic indicators, Pioneer Strategic 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 Pioneer Strategic

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

The idea behind American Mutual Fund and Pioneer Strategic Income 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 Portfolio File Import module to quickly import all of your third-party portfolios from your local drive in csv format.