Correlation Between Columbia Minnesota and Franklin Minnesota
Can any of the company-specific risk be diversified away by investing in both Columbia Minnesota and Franklin Minnesota 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 Minnesota and Franklin Minnesota into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Minnesota Tax Exempt and Franklin Minnesota Tax Free, you can compare the effects of market volatilities on Columbia Minnesota and Franklin Minnesota 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 Minnesota with a short position of Franklin Minnesota. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Minnesota and Franklin Minnesota.
Diversification Opportunities for Columbia Minnesota and Franklin Minnesota
0.93 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Columbia and Franklin is 0.93. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Minnesota Tax Exempt and Franklin Minnesota Tax Free in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Minnesota Tax and Columbia Minnesota 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 Minnesota Tax Exempt are associated (or correlated) with Franklin Minnesota. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Minnesota Tax has no effect on the direction of Columbia Minnesota i.e., Columbia Minnesota and Franklin Minnesota go up and down completely randomly.
Pair Corralation between Columbia Minnesota and Franklin Minnesota
Assuming the 90 days horizon Columbia Minnesota Tax Exempt is expected to generate 1.1 times more return on investment than Franklin Minnesota. However, Columbia Minnesota is 1.1 times more volatile than Franklin Minnesota Tax Free. It trades about 0.17 of its potential returns per unit of risk. Franklin Minnesota Tax Free is currently generating about 0.16 per unit of risk. If you would invest 1,944 in Columbia Minnesota Tax Exempt on November 30, 2024 and sell it today you would earn a total of 37.00 from holding Columbia Minnesota Tax Exempt or generate 1.9% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Minnesota Tax Exempt vs. Franklin Minnesota Tax Free
Performance |
| Timeline |
| Columbia Minnesota Tax |
| Franklin Minnesota Tax |
Columbia Minnesota and Franklin Minnesota Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Minnesota and Franklin Minnesota
The main advantage of trading using opposite Columbia Minnesota and Franklin Minnesota positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Minnesota position performs unexpectedly, Franklin Minnesota 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 Franklin Minnesota will offset losses from the drop in Franklin Minnesota's long position.| Columbia Minnesota vs. Barings High Yield | Columbia Minnesota vs. Access Flex High | Columbia Minnesota vs. Ab High Income | Columbia Minnesota vs. Aqr Alternative Risk |
| Franklin Minnesota vs. Stone Ridge Diversified | Franklin Minnesota vs. Elfun Diversified Fund | Franklin Minnesota vs. Madison Diversified Income | Franklin Minnesota vs. Jpmorgan Diversified 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 Volatility Analysis module to get historical volatility and risk analysis based on latest market data.
Other Complementary Tools
| Portfolio Comparator Compare the composition, asset allocations and performance of any two portfolios in your account | |
| Portfolio Analyzer Portfolio analysis module that provides access to portfolio diagnostics and optimization engine | |
| Money Flow Index Determine momentum by analyzing Money Flow Index and other technical indicators | |
| Watchlist Optimization Optimize watchlists to build efficient portfolios or rebalance existing positions based on the mean-variance optimization algorithm | |
| Financial Widgets Easily integrated Macroaxis content with over 30 different plug-and-play financial widgets |