Correlation Between Multi-manager Directional and Columbia Contrarian
Can any of the company-specific risk be diversified away by investing in both Multi-manager Directional and Columbia Contrarian 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 Contrarian 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 Trarian Core, you can compare the effects of market volatilities on Multi-manager Directional and Columbia Contrarian 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 Contrarian. Check out your portfolio center. Please also check ongoing floating volatility patterns of Multi-manager Directional and Columbia Contrarian.
Diversification Opportunities for Multi-manager Directional and Columbia Contrarian
0.91 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Multi-manager and Columbia is 0.91. Overlapping area represents the amount of risk that can be diversified away by holding Multi Manager Directional Alte and Columbia Trarian Core in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Columbia Trarian Core 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 Contrarian. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Columbia Trarian Core has no effect on the direction of Multi-manager Directional i.e., Multi-manager Directional and Columbia Contrarian go up and down completely randomly.
Pair Corralation between Multi-manager Directional and Columbia Contrarian
Assuming the 90 days horizon Multi-manager Directional is expected to generate 1.02 times less return on investment than Columbia Contrarian. But when comparing it to its historical volatility, Multi Manager Directional Alternative is 1.46 times less risky than Columbia Contrarian. It trades about 0.15 of its potential returns per unit of risk. Columbia Trarian Core is currently generating about 0.11 of returns per unit of risk over similar time horizon. If you would invest 3,450 in Columbia Trarian Core on September 3, 2024 and sell it today you would earn a total of 501.00 from holding Columbia Trarian Core or generate 14.52% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Multi Manager Directional Alte vs. Columbia Trarian Core
Performance |
| Timeline |
| Multi-manager Directional |
| Columbia Trarian Core |
Multi-manager Directional and Columbia Contrarian Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Multi-manager Directional and Columbia Contrarian
The main advantage of trading using opposite Multi-manager Directional and Columbia Contrarian positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Multi-manager Directional position performs unexpectedly, Columbia Contrarian 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 Contrarian will offset losses from the drop in Columbia Contrarian's long position.| Multi-manager Directional vs. Sprott Gold Equity | Multi-manager Directional vs. Gabelli Gold Fund | Multi-manager Directional vs. Gamco Global Gold | Multi-manager Directional vs. Great West Goldman Sachs |
| Columbia Contrarian vs. Columbia Large Cap | Columbia Contrarian vs. Columbia Dividend Income | Columbia Contrarian vs. Columbia Balanced Fund | Columbia Contrarian vs. Janus Triton Fund |
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 Transaction History module to view history of all your transactions and understand their impact on performance.
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