Correlation Between Columbia Large and First American
Can any of the company-specific risk be diversified away by investing in both Columbia Large and First American 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 Large and First American into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Large Cap and First American Funds, you can compare the effects of market volatilities on Columbia Large and First American 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 Large with a short position of First American. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Large and First American.
Diversification Opportunities for Columbia Large and First American
0.74 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Columbia and First is 0.74. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Large Cap and First American Funds in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on First American Funds and Columbia Large 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 Large Cap are associated (or correlated) with First American. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of First American Funds has no effect on the direction of Columbia Large i.e., Columbia Large and First American go up and down completely randomly.
Pair Corralation between Columbia Large and First American
Assuming the 90 days horizon Columbia Large Cap is expected to generate 5.26 times more return on investment than First American. However, Columbia Large is 5.26 times more volatile than First American Funds. It trades about 0.21 of its potential returns per unit of risk. First American Funds is currently generating about 0.13 per unit of risk. If you would invest 2,774 in Columbia Large Cap on September 12, 2024 and sell it today you would earn a total of 213.00 from holding Columbia Large Cap or generate 7.68% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 85.71% |
| Values | Daily Returns |
Columbia Large Cap vs. First American Funds
Performance |
| Timeline |
| Columbia Large Cap |
Risk-Adjusted Performance
0 of 100
Weak | Strong |
Solid
| First American Funds |
Columbia Large and First American Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Large and First American
The main advantage of trading using opposite Columbia Large and First American positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Large position performs unexpectedly, First American 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 First American will offset losses from the drop in First American's long position.| Columbia Large vs. T Rowe Price | Columbia Large vs. Fa 529 Aggressive | Columbia Large vs. Qs Large Cap | Columbia Large vs. Western Asset Municipal |
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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 Transaction History module to view history of all your transactions and understand their impact on performance.
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