Correlation Between Barings Us and Columbia Convertible
Can any of the company-specific risk be diversified away by investing in both Barings Us and Columbia Convertible 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 Barings Us and Columbia Convertible into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Barings High Yield and Columbia Convertible Securities, you can compare the effects of market volatilities on Barings Us and Columbia Convertible 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 Barings Us with a short position of Columbia Convertible. Check out your portfolio center. Please also check ongoing floating volatility patterns of Barings Us and Columbia Convertible.
Diversification Opportunities for Barings Us and Columbia Convertible
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Barings and Columbia is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Barings High Yield and Columbia Convertible Securitie in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Convertible and Barings Us 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 Barings High Yield are associated (or correlated) with Columbia Convertible. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Convertible has no effect on the direction of Barings Us i.e., Barings Us and Columbia Convertible go up and down completely randomly.
Pair Corralation between Barings Us and Columbia Convertible
Assuming the 90 days horizon Barings Us is expected to generate 2.86 times less return on investment than Columbia Convertible. But when comparing it to its historical volatility, Barings High Yield is 2.15 times less risky than Columbia Convertible. It trades about 0.11 of its potential returns per unit of risk. Columbia Convertible Securities is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest 2,118 in Columbia Convertible Securities on October 25, 2024 and sell it today you would earn a total of 142.00 from holding Columbia Convertible Securities or generate 6.7% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 15.01% |
| Values | Daily Returns |
Barings High Yield vs. Columbia Convertible Securitie
Performance |
| Timeline |
| Barings High Yield |
| Columbia Convertible |
Barings Us and Columbia Convertible Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Barings Us and Columbia Convertible
The main advantage of trading using opposite Barings Us and Columbia Convertible positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Barings Us position performs unexpectedly, Columbia Convertible 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 Convertible will offset losses from the drop in Columbia Convertible's long position.| Barings Us vs. Nuveen Mid Cap | Barings Us vs. Shelton E Value | Barings Us vs. Western Asset Adjustable | Barings Us vs. Issachar Fund Class |
| Columbia Convertible vs. Live Oak Health | Columbia Convertible vs. Lord Abbett Health | Columbia Convertible vs. Alger Health Sciences | Columbia Convertible vs. Baillie Gifford Health |
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 AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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