Correlation Between Columbia Government and Ab Municipal
Can any of the company-specific risk be diversified away by investing in both Columbia Government and Ab 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 Government and Ab Municipal into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Government Mortgage and Ab Municipal Bond, you can compare the effects of market volatilities on Columbia Government and Ab 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 Government with a short position of Ab Municipal. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Government and Ab Municipal.
Diversification Opportunities for Columbia Government and Ab Municipal
-0.3 | Correlation Coefficient |
Very good diversification
The 3 months correlation between Columbia and AUNTX is -0.3. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Government Mortgage and Ab Municipal Bond in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ab Municipal Bond and Columbia Government 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 Government Mortgage are associated (or correlated) with Ab Municipal. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ab Municipal Bond has no effect on the direction of Columbia Government i.e., Columbia Government and Ab Municipal go up and down completely randomly.
Pair Corralation between Columbia Government and Ab Municipal
Assuming the 90 days horizon Columbia Government Mortgage is expected to under-perform the Ab Municipal. In addition to that, Columbia Government is 2.34 times more volatile than Ab Municipal Bond. It trades about -0.07 of its total potential returns per unit of risk. Ab Municipal Bond is currently generating about 0.18 per unit of volatility. If you would invest 1,067 in Ab Municipal Bond on August 26, 2024 and sell it today you would earn a total of 7.00 from holding Ab Municipal Bond or generate 0.66% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Against |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Columbia Government Mortgage vs. Ab Municipal Bond
Performance |
| Timeline |
| Columbia Government |
| Ab Municipal Bond |
Columbia Government and Ab Municipal Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Government and Ab Municipal
The main advantage of trading using opposite Columbia Government and Ab Municipal positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Government position performs unexpectedly, Ab 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 Ab Municipal will offset losses from the drop in Ab Municipal's long position.| Columbia Government vs. Ab Municipal Bond | Columbia Government vs. Schwab Treasury Inflation | Columbia Government vs. Ab Bond Inflation | Columbia Government vs. Guidepath Managed Futures |
| Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab Global E | Ab Municipal vs. Ab Minnesota Portfolio | Ab Municipal vs. Ab All Market |
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 Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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