Correlation Between Columbia Moderate and Ishares Municipal
Can any of the company-specific risk be diversified away by investing in both Columbia Moderate and Ishares Municipal 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 Moderate and Ishares Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Moderate Growth and Ishares Municipal Bond, you can compare the effects of market volatilities on Columbia Moderate and Ishares Municipal 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 Moderate with a short position of Ishares Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Moderate and Ishares Municipal.
Diversification Opportunities for Columbia Moderate and Ishares Municipal
0.65 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Columbia and Ishares is 0.65. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Moderate Growth and Ishares Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ishares Municipal Bond and Columbia Moderate 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 Moderate Growth are associated (or correlated) with Ishares Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ishares Municipal Bond has no effect on the direction of Columbia Moderate i.e., Columbia Moderate and Ishares Municipal go up and down completely randomly.
Pair Corralation between Columbia Moderate and Ishares Municipal
Assuming the 90 days horizon Columbia Moderate Growth is expected to under-perform the Ishares Municipal. In addition to that, Columbia Moderate is 2.39 times more volatile than Ishares Municipal Bond. It trades about -0.19 of its total potential returns per unit of risk. Ishares Municipal Bond is currently generating about -0.3 per unit of volatility. If you would invest 1,118 in Ishares Municipal Bond on October 11, 2024 and sell it today you would lose (18.00) from holding Ishares Municipal Bond or give up 1.61% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 95.24% |
| Values | Daily Returns |
Columbia Moderate Growth vs. Ishares Municipal Bond
Performance |
| Timeline |
| Columbia Moderate Growth |
| Ishares Municipal Bond |
Columbia Moderate and Ishares Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Moderate and Ishares Municipal
The main advantage of trading using opposite Columbia Moderate and Ishares Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Moderate position performs unexpectedly, Ishares Municipal 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 Ishares Municipal will offset losses from the drop in Ishares Municipal's long position.| Columbia Moderate vs. Elfun Government Money | Columbia Moderate vs. Hewitt Money Market | Columbia Moderate vs. Ab Government Exchange | Columbia Moderate vs. Fidelity Government Money |
| Ishares Municipal vs. Fidelity Capital Income | Ishares Municipal vs. Lord Abbett Short | Ishares Municipal vs. Msift High Yield | Ishares Municipal vs. Buffalo High Yield |
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 Money Managers module to screen money managers from public funds and ETFs managed around the world.
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