Correlation Between Multi-manager Directional and Columbia Capital
Can any of the company-specific risk be diversified away by investing in both Multi-manager Directional 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 Multi-manager Directional and Columbia Capital 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 Capital Allocation, you can compare the effects of market volatilities on Multi-manager Directional 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 Multi-manager Directional with a short position of Columbia Capital. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi-manager Directional and Columbia Capital.
Diversification Opportunities for Multi-manager Directional and Columbia Capital
0.82 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Multi-manager and Columbia is 0.82. Overlapping area represents the amount of risk that can be diversified away by holding Multi Manager Directional Alte 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 Multi-manager Directional 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 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 Multi-manager Directional i.e., Multi-manager Directional and Columbia Capital go up and down completely randomly.
Pair Corralation between Multi-manager Directional and Columbia Capital
Assuming the 90 days horizon Multi Manager Directional Alternative is expected to generate 0.9 times more return on investment than Columbia Capital. However, Multi Manager Directional Alternative is 1.11 times less risky than Columbia Capital. It trades about 0.23 of its potential returns per unit of risk. Columbia Capital Allocation is currently generating about 0.09 per unit of risk. If you would invest 744.00 in Multi Manager Directional Alternative on October 25, 2024 and sell it today you would earn a total of 18.00 from holding Multi Manager Directional Alternative or generate 2.42% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Manager Directional Alte vs. Columbia Capital Allocation
Performance |
| Timeline |
| Multi-manager Directional |
| Columbia Capital All |
Multi-manager Directional and Columbia Capital Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi-manager Directional and Columbia Capital
The main advantage of trading using opposite Multi-manager Directional and Columbia Capital positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi-manager Directional 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.The idea behind Multi Manager Directional Alternative and Columbia Capital Allocation pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.
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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 Price Ceiling Movement module to calculate and plot Price Ceiling Movement for different equity instruments.
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