Correlation Between Bridge Builder and Mutual Of

Can any of the company-specific risk be diversified away by investing in both Bridge Builder and Mutual Of 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 Bridge Builder and Mutual Of into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Bridge Builder International and Mutual Of America, you can compare the effects of market volatilities on Bridge Builder and Mutual Of 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 Bridge Builder with a short position of Mutual Of. Check out your portfolio center. Please also check ongoing floating volatility patterns of Bridge Builder and Mutual Of.

Diversification Opportunities for Bridge Builder and Mutual Of

-0.63

Correlation Coefficient

Bridge Builder  Mutual Of

Excellent diversification

The 3 months correlation between Bridge and Mutual is -0.63. Overlapping area represents the amount of risk that can be diversified away by holding Bridge Builder International and Mutual Of America in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Mutual Of America and Bridge Builder 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 Bridge Builder International are associated (or correlated) with Mutual Of. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Mutual Of America has no effect on the direction of Bridge Builder i.e., Bridge Builder and Mutual Of go up and down completely randomly.

Pair Corralation between Bridge Builder and Mutual Of

Assuming the 90 days horizon Bridge Builder International is expected to under-perform the Mutual Of. But the mutual fund apears to be less risky and, when comparing its historical volatility, Bridge Builder International is 1.68 times less risky than Mutual Of. The mutual fund trades about -0.03 of its potential returns per unit of risk. The Mutual Of America is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  1,447  in Mutual Of America on September 12, 2024 and sell it today you would earn a total of  169.00  from holding Mutual Of America or generate 11.68% return on investment over 90 days.

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

Bridge Builder International  vs.  Mutual Of America

Bridge Builder Inter

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Bridge Builder International has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong technical and fundamental indicators, Bridge Builder is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Mutual Of America

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Mutual Of America are ranked lower than 11 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak forward-looking signals, Mutual Of may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Bridge Builder and Mutual Of

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

The idea behind Bridge Builder International and Mutual Of America 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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.