Correlation Between Columbia Balanced and Shenkman Short
Can any of the company-specific risk be diversified away by investing in both Columbia Balanced and Shenkman Short 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 Columbia Balanced and Shenkman Short into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Balanced Fund and Shenkman Short Duration, you can compare the effects of market volatilities on Columbia Balanced and Shenkman Short 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 Columbia Balanced with a short position of Shenkman Short. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Balanced and Shenkman Short.
Diversification Opportunities for Columbia Balanced and Shenkman Short
0.84 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Columbia and Shenkman is 0.84. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Balanced Fund and Shenkman Short Duration in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Shenkman Short Duration and Columbia 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 Columbia Balanced Fund are associated (or correlated) with Shenkman Short. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Shenkman Short Duration has no effect on the direction of Columbia Balanced i.e., Columbia Balanced and Shenkman Short go up and down completely randomly.
Pair Corralation between Columbia Balanced and Shenkman Short
Assuming the 90 days horizon Columbia Balanced Fund is expected to generate 4.52 times more return on investment than Shenkman Short. However, Columbia Balanced is 4.52 times more volatile than Shenkman Short Duration. It trades about 0.13 of its potential returns per unit of risk. Shenkman Short Duration is currently generating about 0.26 per unit of risk. If you would invest 4,344 in Columbia Balanced Fund on August 31, 2024 and sell it today you would earn a total of 1,204 from holding Columbia Balanced Fund or generate 27.72% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 99.73% |
| Values | Daily Returns |
Columbia Balanced Fund vs. Shenkman Short Duration
Performance |
| Timeline |
| Columbia Balanced |
| Shenkman Short Duration |
Columbia Balanced and Shenkman Short Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Balanced and Shenkman Short
The main advantage of trading using opposite Columbia Balanced and Shenkman Short positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Balanced position performs unexpectedly, Shenkman Short 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 Shenkman Short will offset losses from the drop in Shenkman Short's long position.| Columbia Balanced vs. Columbia Trarian Core | Columbia Balanced vs. Columbia Dividend Income | Columbia Balanced vs. Columbia Disciplined E | Columbia Balanced vs. Columbia Dividend Opportunity |
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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 Portfolio Rebalancing module to analyze risk-adjusted returns against different time horizons to find asset-allocation targets.
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