Correlation Between Applied Finance and Columbia Large
Can any of the company-specific risk be diversified away by investing in both Applied Finance and Columbia Large 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 Applied Finance and Columbia Large into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Applied Finance Explorer and Columbia Large Cap, you can compare the effects of market volatilities on Applied Finance and Columbia Large 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 Applied Finance with a short position of Columbia Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Applied Finance and Columbia Large.
Diversification Opportunities for Applied Finance and Columbia Large
0.6 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Applied and Columbia is 0.6. Overlapping area represents the amount of risk that can be diversified away by holding Applied Finance Explorer and Columbia Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Large Cap and Applied Finance 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 Applied Finance Explorer are associated (or correlated) with Columbia Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Large Cap has no effect on the direction of Applied Finance i.e., Applied Finance and Columbia Large go up and down completely randomly.
Pair Corralation between Applied Finance and Columbia Large
Assuming the 90 days horizon Applied Finance Explorer is expected to under-perform the Columbia Large. In addition to that, Applied Finance is 1.69 times more volatile than Columbia Large Cap. It trades about -0.39 of its total potential returns per unit of risk. Columbia Large Cap is currently generating about -0.14 per unit of volatility. If you would invest 1,003 in Columbia Large Cap on October 11, 2024 and sell it today you would lose (18.00) from holding Columbia Large Cap or give up 1.79% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Applied Finance Explorer vs. Columbia Large Cap
Performance |
| Timeline |
| Applied Finance Explorer |
| Columbia Large Cap |
Applied Finance and Columbia Large Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Applied Finance and Columbia Large
The main advantage of trading using opposite Applied Finance and Columbia Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Applied Finance position performs unexpectedly, Columbia Large 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 Columbia Large will offset losses from the drop in Columbia Large's long position.| Applied Finance vs. Thrivent Small Cap | Applied Finance vs. Applied Finance Select | Applied Finance vs. Parnassus Endeavor Fund | Applied Finance vs. Queens Road Small |
| Columbia Large vs. Guidemark Large Cap | Columbia Large vs. Tax Managed Large Cap | Columbia Large vs. Calvert Large Cap | Columbia Large vs. Fundamental Large Cap |
Check out your portfolio center.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.
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