Correlation Between Ab Municipal and Columbia Emerging
Can any of the company-specific risk be diversified away by investing in both Ab Municipal and Columbia Emerging 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 Ab Municipal and Columbia Emerging into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Ab Municipal Bond and Columbia Emerging Markets, you can compare the effects of market volatilities on Ab Municipal and Columbia Emerging 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 Ab Municipal with a short position of Columbia Emerging. Check out your portfolio center. Please also check ongoing floating volatility patterns of Ab Municipal and Columbia Emerging.
Diversification Opportunities for Ab Municipal and Columbia Emerging
0.8 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between AUNYX and Columbia is 0.8. Overlapping area represents the amount of risk that can be diversified away by holding Ab Municipal Bond and Columbia Emerging Markets in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Emerging Markets and Ab Municipal 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 Ab Municipal Bond are associated (or correlated) with Columbia Emerging. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Emerging Markets has no effect on the direction of Ab Municipal i.e., Ab Municipal and Columbia Emerging go up and down completely randomly.
Pair Corralation between Ab Municipal and Columbia Emerging
Assuming the 90 days horizon Ab Municipal is expected to generate 2.07 times less return on investment than Columbia Emerging. But when comparing it to its historical volatility, Ab Municipal Bond is 5.18 times less risky than Columbia Emerging. It trades about 0.05 of its potential returns per unit of risk. Columbia Emerging Markets is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest 1,189 in Columbia Emerging Markets on January 15, 2025 and sell it today you would earn a total of 75.00 from holding Columbia Emerging Markets or generate 6.31% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.78% |
| Values | Daily Returns |
Ab Municipal Bond vs. Columbia Emerging Markets
Performance |
| Timeline |
| Ab Municipal Bond |
| Columbia Emerging Markets |
Ab Municipal and Columbia Emerging Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Ab Municipal and Columbia Emerging
The main advantage of trading using opposite Ab Municipal and Columbia Emerging positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Ab Municipal position performs unexpectedly, Columbia Emerging 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 Emerging will offset losses from the drop in Columbia Emerging's long position.| Ab Municipal vs. Forum Funds | Ab Municipal vs. Columbia Convertible Securities | Ab Municipal vs. Lord Abbett Vertible | Ab Municipal vs. Teton Vertible Securities |
| Columbia Emerging vs. Wcm Focused International | Columbia Emerging vs. Artisan Developing World | Columbia Emerging vs. International Advantage Portfolio | Columbia Emerging vs. Causeway Emerging Markets |
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 Risk-Return Analysis module to view associations between returns expected from investment and the risk you assume.
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