Correlation Between Multi Manager and Columbia Balanced
Can any of the company-specific risk be diversified away by investing in both Multi Manager and Columbia Balanced 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 Multi Manager and Columbia Balanced into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Multi Manager Directional Alternative and Columbia Balanced Fund, you can compare the effects of market volatilities on Multi Manager and Columbia Balanced 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 Multi Manager with a short position of Columbia Balanced. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi Manager and Columbia Balanced.
Diversification Opportunities for Multi Manager and Columbia Balanced
0.75 | Correlation Coefficient |
Poor diversification
The 3 months correlation between MULTI and Columbia is 0.75. Overlapping area represents the amount of risk that can be diversified away by holding Multi Manager Directional Alte and Columbia Balanced Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Balanced and Multi Manager 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 Multi Manager Directional Alternative are associated (or correlated) with Columbia Balanced. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Balanced has no effect on the direction of Multi Manager i.e., Multi Manager and Columbia Balanced go up and down completely randomly.
Pair Corralation between Multi Manager and Columbia Balanced
Assuming the 90 days horizon Multi Manager Directional Alternative is expected to generate 1.96 times more return on investment than Columbia Balanced. However, Multi Manager is 1.96 times more volatile than Columbia Balanced Fund. It trades about 0.34 of its potential returns per unit of risk. Columbia Balanced Fund is currently generating about 0.11 per unit of risk. If you would invest 771.00 in Multi Manager Directional Alternative on August 25, 2024 and sell it today you would earn a total of 61.00 from holding Multi Manager Directional Alternative or generate 7.91% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Manager Directional Alte vs. Columbia Balanced Fund
Performance |
| Timeline |
| Multi Manager Direct |
| Columbia Balanced |
Multi Manager and Columbia Balanced Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi Manager and Columbia Balanced
The main advantage of trading using opposite Multi Manager and Columbia Balanced positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi Manager position performs unexpectedly, Columbia Balanced 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 Balanced will offset losses from the drop in Columbia Balanced's long position.| Multi Manager vs. Legg Mason Bw | Multi Manager vs. Federated Mdt Large | Multi Manager vs. Touchstone Large Cap | Multi Manager vs. Aqr Large Cap |
| Columbia Balanced vs. Columbia Balanced Fund | Columbia Balanced vs. Columbia Balanced Fund | Columbia Balanced vs. Columbia Balanced Fund | Columbia Balanced vs. Columbia Large Cap |
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 Equity Analysis module to research over 250,000 global equities including funds, stocks and ETFs to find investment opportunities.
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