Correlation Between American Balanced and Columbia Capital
Can any of the company-specific risk be diversified away by investing in both American Balanced and Columbia Capital 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 Balanced and Columbia Capital into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between American Balanced Fund and Columbia Capital Allocation, you can compare the effects of market volatilities on American Balanced and Columbia Capital 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 Balanced with a short position of Columbia Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of American Balanced and Columbia Capital.
Diversification Opportunities for American Balanced and Columbia Capital
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between American and Columbia is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding American Balanced Fund and Columbia Capital Allocation in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Capital All and American Balanced 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 Balanced Fund are associated (or correlated) with Columbia Capital. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Capital All has no effect on the direction of American Balanced i.e., American Balanced and Columbia Capital go up and down completely randomly.
Pair Corralation between American Balanced and Columbia Capital
Assuming the 90 days horizon American Balanced Fund is expected to generate 0.98 times more return on investment than Columbia Capital. However, American Balanced Fund is 1.02 times less risky than Columbia Capital. It trades about 0.05 of its potential returns per unit of risk. Columbia Capital Allocation is currently generating about 0.04 per unit of risk. If you would invest 3,503 in American Balanced Fund on November 27, 2024 and sell it today you would earn a total of 15.00 from holding American Balanced Fund or generate 0.43% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
American Balanced Fund vs. Columbia Capital Allocation
Performance |
| Timeline |
| American Balanced |
| Columbia Capital All |
American Balanced and Columbia Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with American Balanced and Columbia Capital
The main advantage of trading using opposite American Balanced and Columbia Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if American Balanced position performs unexpectedly, Columbia Capital 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 Capital will offset losses from the drop in Columbia Capital's long position.| American Balanced vs. Income Fund Of | American Balanced vs. Capital Income Builder | American Balanced vs. Capital World Growth | American Balanced vs. Growth Fund Of |
| Columbia Capital vs. Hsbc Funds | Columbia Capital vs. John Hancock Money | Columbia Capital vs. Aig Government Money | Columbia Capital vs. Transamerica Funds |
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 Fundamentals Comparison module to compare fundamentals across multiple equities to find investing opportunities.
Other Complementary Tools
| Analyst Advice Analyst recommendations and target price estimates broken down by several categories | |
| Correlation Analysis Reduce portfolio risk simply by holding instruments which are not perfectly correlated | |
| Portfolio Optimization Compute new portfolio that will generate highest expected return given your specified tolerance for risk | |
| Bollinger Bands Use Bollinger Bands indicator to analyze target price for a given investing horizon | |
| Portfolio Holdings Check your current holdings and cash postion to detemine if your portfolio needs rebalancing |