Correlation Between Columbia Floating and American Funds
Can any of the company-specific risk be diversified away by investing in both Columbia Floating and American Funds 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 Floating and American Funds into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Floating Rate and American Funds Income, you can compare the effects of market volatilities on Columbia Floating and American Funds 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 Floating with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Floating and American Funds.
Diversification Opportunities for Columbia Floating and American Funds
-0.35 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Columbia and American is -0.35. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Floating Rate and American Funds Income in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds Income and Columbia Floating 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 Floating Rate are associated (or correlated) with American Funds. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Funds Income has no effect on the direction of Columbia Floating i.e., Columbia Floating and American Funds go up and down completely randomly.
Pair Corralation between Columbia Floating and American Funds
Assuming the 90 days horizon Columbia Floating is expected to generate 5.15 times less return on investment than American Funds. But when comparing it to its historical volatility, Columbia Floating Rate is 2.72 times less risky than American Funds. It trades about 0.19 of its potential returns per unit of risk. American Funds Income is currently generating about 0.35 of returns per unit of risk over similar time horizon. If you would invest 1,316 in American Funds Income on November 8, 2024 and sell it today you would earn a total of 39.00 from holding American Funds Income or generate 2.96% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Floating Rate vs. American Funds Income
Performance |
| Timeline |
| Columbia Floating Rate |
| American Funds Income |
Columbia Floating and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Floating and American Funds
The main advantage of trading using opposite Columbia Floating and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Floating position performs unexpectedly, American Funds 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 American Funds will offset losses from the drop in American Funds' long position.| Columbia Floating vs. Columbia Large Cap | Columbia Floating vs. Columbia Large Cap | Columbia Floating vs. Columbia Corporate Income | Columbia Floating vs. Columbia Large Cap |
| American Funds vs. Fidelity Small Cap | American Funds vs. Small Cap Value Profund | American Funds vs. Great West Loomis Sayles | American Funds vs. Small Cap Value |
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 Bond Analysis module to evaluate and analyze corporate bonds as a potential investment for your portfolios..
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