Correlation Between Columbia Commodity and Dow Jones
Can any of the company-specific risk be diversified away by investing in both Columbia Commodity and Dow Jones 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 Commodity and Dow Jones into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Modity Strategy and Dow Jones Industrial, you can compare the effects of market volatilities on Columbia Commodity and Dow Jones 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 Commodity with a short position of Dow Jones. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Commodity and Dow Jones.
Diversification Opportunities for Columbia Commodity and Dow Jones
0.4 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Columbia and Dow is 0.4. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Modity Strategy and Dow Jones Industrial in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dow Jones Industrial and Columbia Commodity 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 Modity Strategy are associated (or correlated) with Dow Jones. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dow Jones Industrial has no effect on the direction of Columbia Commodity i.e., Columbia Commodity and Dow Jones go up and down completely randomly.
Pair Corralation between Columbia Commodity and Dow Jones
Assuming the 90 days horizon Columbia Modity Strategy is expected to under-perform the Dow Jones. But the mutual fund apears to be less risky and, when comparing its historical volatility, Columbia Modity Strategy is 1.22 times less risky than Dow Jones. The mutual fund trades about -0.08 of its potential returns per unit of risk. The Dow Jones Industrial is currently generating about 0.36 of returns per unit of risk over similar time horizon. If you would invest 4,179,460 in Dow Jones Industrial on September 4, 2024 and sell it today you would earn a total of 298,740 from holding Dow Jones Industrial or generate 7.15% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Modity Strategy vs. Dow Jones Industrial
Performance |
| Timeline |
Columbia Commodity and Dow Jones Volatility Contrast
Predicted Return Density |
| Returns |
Columbia Modity Strategy
Pair trading matchups for Columbia Commodity
Dow Jones Industrial
Pair trading matchups for Dow Jones
Pair Trading with Columbia Commodity and Dow Jones
The main advantage of trading using opposite Columbia Commodity and Dow Jones positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Commodity position performs unexpectedly, Dow Jones 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 Dow Jones will offset losses from the drop in Dow Jones' long position.| Columbia Commodity vs. Champlain Mid Cap | Columbia Commodity vs. Qs Moderate Growth | Columbia Commodity vs. Mid Cap Growth | Columbia Commodity vs. Pace Smallmedium Growth |
| Dow Jones vs. Gentex | Dow Jones vs. American Axle Manufacturing | Dow Jones vs. Pearson PLC ADR | Dow Jones vs. Marine Products |
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 Commodity Directory module to find actively traded commodities issued by global exchanges.
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