Correlation Between Mutual Of and Bridge Builder

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

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

Diversification Opportunities for Mutual Of and Bridge Builder

-0.63

Correlation Coefficient

Mutual Of  Bridge Builder

Excellent diversification

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

Pair Corralation between Mutual Of and Bridge Builder

Assuming the 90 days horizon Mutual Of America is expected to generate 1.68 times more return on investment than Bridge Builder. However, Mutual Of is 1.68 times more volatile than Bridge Builder International. It trades about 0.15 of its potential returns per unit of risk. Bridge Builder International is currently generating about -0.03 per unit of risk. 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

Mutual Of America  vs.  Bridge Builder International

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.

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.

Pair Trading with Mutual Of and Bridge Builder

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

The idea behind Mutual Of America and Bridge Builder International 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 Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.