Correlation Between Columbia Global and American Funds
Can any of the company-specific risk be diversified away by investing in both Columbia Global 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 Global 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 Global Technology and American Funds 2040, you can compare the effects of market volatilities on Columbia Global 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 Global with a short position of American Funds. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Global and American Funds.
Diversification Opportunities for Columbia Global and American Funds
0.33 | Correlation Coefficient |
Weak diversification
The 3 months correlation between Columbia and American is 0.33. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Global Technology and American Funds 2040 in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Funds 2040 and Columbia Global 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 Global Technology 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 2040 has no effect on the direction of Columbia Global i.e., Columbia Global and American Funds go up and down completely randomly.
Pair Corralation between Columbia Global and American Funds
Assuming the 90 days horizon Columbia Global Technology is expected to generate 1.3 times more return on investment than American Funds. However, Columbia Global is 1.3 times more volatile than American Funds 2040. It trades about -0.01 of its potential returns per unit of risk. American Funds 2040 is currently generating about -0.22 per unit of risk. If you would invest 9,394 in Columbia Global Technology on October 9, 2024 and sell it today you would lose (49.00) from holding Columbia Global Technology or give up 0.52% of portfolio value over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Global Technology vs. American Funds 2040
Performance |
| Timeline |
| Columbia Global Tech |
| American Funds 2040 |
Columbia Global and American Funds Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Global and American Funds
The main advantage of trading using opposite Columbia Global and American Funds positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Global 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 Global vs. Columbia Global Technology | Columbia Global vs. Columbia Small Cap | Columbia Global vs. William Blair International | Columbia Global vs. Columbia Global Dividend |
| American Funds vs. Income Fund Of | American Funds vs. New World Fund | American Funds vs. American Mutual Fund | American Funds vs. American Mutual 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 Financial Widgets module to easily integrated Macroaxis content with over 30 different plug-and-play financial widgets.
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