Correlation Between Columbia Small and Aama Income
Can any of the company-specific risk be diversified away by investing in both Columbia Small and Aama Income 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 Small and Aama Income into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Columbia Small Cap and Aama Income Fund, you can compare the effects of market volatilities on Columbia Small and Aama Income 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 Small with a short position of Aama Income. Check out your portfolio center. Please also check ongoing floating volatility patterns of Columbia Small and Aama Income.
Diversification Opportunities for Columbia Small and Aama Income
0.42 | Correlation Coefficient |
Very weak diversification
The 3 months correlation between Columbia and Aama is 0.42. Overlapping area represents the amount of risk that can be diversified away by holding Columbia Small Cap and Aama Income Fund in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Aama Income Fund and Columbia Small 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 Small Cap are associated (or correlated) with Aama Income. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Aama Income Fund has no effect on the direction of Columbia Small i.e., Columbia Small and Aama Income go up and down completely randomly.
Pair Corralation between Columbia Small and Aama Income
Assuming the 90 days horizon Columbia Small Cap is expected to generate 25.6 times more return on investment than Aama Income. However, Columbia Small is 25.6 times more volatile than Aama Income Fund. It trades about 0.27 of its potential returns per unit of risk. Aama Income Fund is currently generating about 0.03 per unit of risk. If you would invest 5,351 in Columbia Small Cap on August 30, 2024 and sell it today you would earn a total of 441.00 from holding Columbia Small Cap or generate 8.24% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Weak |
| Accuracy | 91.3% |
| Values | Daily Returns |
Columbia Small Cap vs. Aama Income Fund
Performance |
| Timeline |
| Columbia Small Cap |
| Aama Income Fund |
Columbia Small and Aama Income Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Columbia Small and Aama Income
The main advantage of trading using opposite Columbia Small and Aama Income positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Columbia Small position performs unexpectedly, Aama Income 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 Aama Income will offset losses from the drop in Aama Income's long position.| Columbia Small vs. Columbia Porate Income | Columbia Small vs. Columbia Ultra Short | Columbia Small vs. Columbia Ultra Short | Columbia Small vs. Columbia Treasury Index |
| Aama Income vs. Arrow Managed Futures | Aama Income vs. T Rowe Price | Aama Income vs. T Rowe Price | Aama Income vs. Black Oak Emerging |
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 Sectors module to list of equity sectors categorizing publicly traded companies based on their primary business activities.
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